New year’s resolutions may not be your favorite holiday tradition—especially if you’re haunted by a list of abandoned efforts from years past—but we here at Cedar Point Capital Partners appreciate them for their optimism.
At its core, a resolution marks the end of a challenge, and the start of something new. The very act of making one means you’re open to the possibility of change, and that’s the first step to making it happen.
Resolutions can, of course, be big and life-changing, but they can also be about dealing with that nagging issue or to-do that’s been hanging over you all year. Getting it done can bring you mental peace—something we could all use a bit more of.
So what’s your financial resolution this year? Here are a few that we hear often from our clients as part of our year-end meetings, and our thoughts on setting yourself up for success in the new year.
Paying down debt
Financial debt comes with a host of complex emotions and pain points, which explains why so many people focus on it heading into the new year. And while we’re generally in favor of reducing your liabilities, doing it well requires a strategic approach that aligns with your long-term financial goals.
We would start by noting that not all debt is created equal—high-interest, non-deductible debt like credit cards and auto loans are definitely fair game, but low-interest, tax-deductible debt may be worth retaining if the capital you would use to pay it off can generate higher returns elsewhere. Liquidity, cash flow, and the tax implications of selling assets for repayment are other keys we look at to make sure your plan ahead is a sustainable one.
We believe that living debt-free is a worthy goal, but don’t jeopardize your short- or long-term financial health to get there. If you’re ready to eliminate your debt, you need a repayment plan that’s intentional and realistic—our advisers can help with that.
Getting your estate plans in order
We’ve written previously about the importance of having an estate plan, and it’s something we focus on in our firm’s onboarding process, but for one reason or another, some people just choose to put it off. If you’ve (wisely) decided it’s time to put your legacy wishes down on paper, you can count on our team of advisers to create a plan you can trust for the long-term.
You can start the process now by conducting a full inventory of your assets and holdings, including real estate, investments, business interests, and personal property, both tangible and digital. We can then help you navigate the most complex estate topics, including tax efficiency, specific bequests, charitable intentions, and business succession planning.
While it may not seem like fun to start the new year planning what will happen after your death, it actually brings freedom to you and those you love by preparing for one of life’s inevitable events. And that’s what real financial life planning is all about.
Right-sizing (and taking smarter) risks
If you’re contemplating making some portfolio adjustments in the new year, ideally these updates should match up with your risk profile and time horizons—but those things change just like people do. Taking on more risk can be a strategic move, especially if you’re in a wealth accumulation phase or are supporting new financial objectives. It can also just be a matter of changing preferences, such as a conservative investor who’s tired of missing out on the market’s big gains in recent years, or on the flip-side, moving to a less aggressive stance and taking profits from this bull market.
We’re supportive of investors making changes that better reflect their appetite for risk, but you have to be smart, not emotional, about it. As we’ve written before, don’t go out and buy momentum stocks just because the financial press is enamored, or stock up on crypto just because Bitcoin hit $100,000—let’s work together to take prudent, evidence-based risks that set up your portfolio for more of the upside without exposure to unnecessary harm.
What does that look like in practice? Say you’ve resolved to finally get into crypto assets in the new year, after years of heckling by your tech-savvier friends. We can help you complete your due diligence, and understand all of the different risks and use cases with a particular strategy. We’ll also discuss ways to size your risk in what can still be a volatile, ever-evolving frontier.
Right-sizing your risks doesn’t mean being reckless or overly cautious. We can help you find that middle ground that’s aligned with your stated goals and financial plan.
Get a handle on your insurance coverage
Insurance is one of those things that’s easy to set on autopilot, but neglecting to periodically review your coverage could leave you vulnerable in critical life moments. Whether it’s your homeowners or your life insurance, these protections are essential to the durability of your financial life plan, so make sure you understand exactly what you can expect in the event you need it.
We can help dig through the fine print of your policies and look for gaps that can leave you exposed. For example, does your homeowners insurance fully cover the replacement value of your property after a major valuation change? And does it account for specialized coverages, like high-value collectibles or luxury vehicles? These are the sorts of details we can help you look at and evaluate.
And if we uncover a gap in your coverage or simply want a better fit, we can connect you with unaffiliated, independent insurance agencies that specialize in low-fee, low-commission policies. As a fiduciary, we don’t receive any sort of commission for referring people—we just do it because it’s the right thing to do for our clients.
This is the year to take control
The new year is the perfect time to address the areas of your financial life that require attention, refinement, or reinvention. Whether you’re focused on paying down debt, updating your estate plan, adjusting your risk exposure, or ensuring your insurance coverage is solid, any financial resolution you make is a great investment in a more prosperous future.
Let this be the year you take control of your financial life, one thoughtful decision at a time. We are here to help you make it happen. Give us a call today for a free consultation, and let’s grow together.