NEW YORK | It's a time of year when we make promises of self-betterment that we have little intention of keeping. Sure, failing to drop those last few pounds or slog through a big read like "Ulysses" might be disappointing, but losing sight of investment goals can lead to longer-lasting troubles.
"It's fine to have some allocation to those economies, you just don't need to go whole-hog," he said. "It looks great right now. It looks like you can't miss. Inevitably when enough people think like that, that's when the other shoe drops."
Tom Foster, a retirement plans expert at The Hartford, a financial services and insurance company, says many investors see the market's volatility and think they can put aside less for retirement and instead generate bigger returns by diverting some savings into shorter-term bets on the market's movements. But correctly calling the next winning move on Wall Street is hugely difficult even for professional investors. Foster said investors should set aside as much money as possible for retirement and use only any extra money to play the market.
He said dropping a fund for a weak showing over a short period isn't wise investing.
Investors who re-examine where their money sits ahead of the new year shouldn't limit the review to what is found in their 401(k) plan, Tjornehoj said. Tweaking mutual fund investments doesn't matter much if fees from credit card debt, for example, are steadily outpacing gains from fund holdings.
In addition to paying down debt, investors who might be due for bonuses or raises should consider ratcheting up contributions to retirement plans as a way to save more without feeling like they are taking more money out of their pocket today.