Morningstar's financial New Year's resolutions

Bucket!
by Ruth Saldanha, Senior Editor at Morningstar Canada

I want to do a whole bunch of things in the short-term, but never seem to have enough money! But then I realized, it’s probably because my money is in a vague “investment” account where “things” happen to it. Of course, I know what my long-term goals are, and I know where the money is invested, but short-term? Not so much.  So in 2020, I resolve to create buckets for each short-term goal and invest a small amount every month in each bucket. I’ll have a bucket each for travel, music concerts, and Christmas 2020 too!

Get uncomfortable
by Andrew Willis, Content Editor, Morningstar Canada

Financial decisions and negotiations should be stressful. A short period of discomfort and inconvenience pales in comparison to the long-term savings and pride of getting a good deal. I've made some progress, going through the inconvenience of switching bank accounts and mortgages to a credit union along with ditching the Big 3 telecom companies for my cellphone and internet service, yielding nearly identical (often better) service and five-figure savings. My next moves, however, will be rather uncomfortable. For my next home purchase, I resolve to requesting my real estate broker share his commissions if I do my own research and only do a few viewings. I resolve to moving all my investment accounts to a discount broker without trading fees. And I resolve to using the warranty on some big-ticket items at home that have broken down. It's amazing how much you can save by simply asking for what you deserve.

Invest in my home and tax fee haven
by Ian Tam, Director of Investment Research at Morningstar Canada

I resolve to contribute diligently to my TFSA, and frugally invest in my primary residence.
There are very few truly tax free havens in this great country we live in. These two investment types are truly tax free. I say ‘frugally’ invest in my residence because during times of inflated house prices, the temptation to renovate unnecessarily is definitely there. Making reasonable updates to my main residence will hopefully increase home value but moreover improve standards of living.

I also resolve to continue bring humble and disciplined with my equity portfolio. 2019 was a rocket year for North American stocks. It’s easy to get emotionally caught up and wrongfully contribute great results to skill as a portfolio manager. Keeping a keen eye on the prize (retirement) will hopefully keep emotions in check and help me stay the course in my own investment discipline.

Reduce my risk
by Christine Benz, Director of Personal Finance at Morningstar

One long-standing item on my financial to-do list is to look at my husband’s and my asset allocation in total and determine whether we should reposition any investments. Our portfolio is quite equity-heavy relative to any sane recommendation for people our age, but we don’t pay much attention to the market’s short-term fluctuations and consider ourselves extremely risk tolerant.

But I’m mindful of the fact that the last time this tolerance was tested was more than 10 years ago during the financial crisis, when we were 10 years younger and 10 years further from retirement. If stocks go down and stay down for a sustained period, it will likely feel much different – and much worse – than it did on the last go round.

Be prepared
by Syl Flood, Chief Content Strategist at Morningstar

I need to rebalance my investments – part of the problem is that I own some turkeys (funds that haven’t flown) and I should really accept those mistakes and move the money elsewhere. Elsewhere, I vow to reduce unnecessary spend on home security, a landline phone and home insurance and, more morbidly, I need to write my will (sorry, I won’t be writing any of you in).

Finally, I need to buy a personal liability insurance policy. Someone tripped on a crack in the pavement in front of my friend’s house recently; the person sustained a head injury and my friend was sued. Yes, Americans sometimes live up to their litigious reputation. But luckily my friend had personal liability insurance, so the incident didn’t cost her – although the hassle was quite a distraction.

Save money - and calories!
by Dan Kemp, Chief Investment Officer at Morningstar Investment Management UK

Most resolutions are broken very quickly, and often it’s because we think about what we want without thinking about how to achieve it and tend to think we can make lots of large changes at once and stick to them.

So, in 2020 I’m going to follow the advice I often give to others: change one small thing by identifying a better strategy to meet a specific need.

My one small thing is to bring a packed lunch into the office every day, something I’ve got out of the habit of over the past couple of years. Not only will this save me money – about £900 a year – but it will also save me about 40,000 calories a year, along with all that additional salt and sugar. It also means I’ll make lunch for my family rather than them having to do it themselves – let’s hope it lasts beyond the first rushed morning of the year!

Ask an expert
by James Gard, Content Editor at Morningstar UK

I would rather go to the dentist than talk to a stranger about money, but next year I’m going to have to take the plunge and see a financial adviser. I have inherited a lump sum – likely to be my only inheritance – but I can’t decide what to do with it.

Left to my own devices I would put in a savings account and take the 1% a year interest. I don’t want to pay someone to tell me to buy gold ETFs or sink it into a buy-to-let property, but I need an adviser to think of a constructive way of putting the money to work and help me overcome my natural risk aversion. While I want some capital preservation, I have an 8-year-old son and am thinking ahead 10 years to university and beyond and how I can invest the money to help him.

Put my money where my mouth is
by Annalisa Esposito, Data Journalist at Morningstar

Last year I took out a subscription to non-profit magazine Ethical Consumer and it made me think I should invest some savings I had in an ethical fund. I thought: why not put this money to good use, instead of letting it sit sadly in my bank account earning virtually no interest? I always wanted to have “an impact” on the world around me, and I felt that my monthly donation to Doctors without Border wasn’t enough.

But, I never did it – partly for lack of courage and knowledge, and partly through inertia and just never getting around to it.

I didn’t know much about investing and funds at the time but working at Morningstar has taught me the most important lesson: you don’t have to be a millionaire to invest, everyone can do it. Now I have a lot more confidence, I have started to invest in some stocks, and 2020 will be the year I finally invest in some ethical funds. 

Have a difficult conversation
by John Rekenthaler, Vice President of Research at Morningstar

I have four investment accounts, not including my wife’s, and my New Year’s resolution is to consolidate them. I’ve put it off because it’s not only something of an operational hassle, but it means moving money away from a financial adviser with whom I have a relationship. It’s not much of a relationship, to be sure, and I don’t make him much money, because I am a self-directed investor, but nevertheless I don’t relish that conversation.