We shall reserve commenting on this week’s political events in Washington until we have a clearer picture of any relevant financial fallout. There remains a great deal of dust to settle. At the moment — and this is a good thing — the markets are showing a noteworthy lack of concern. So, let’s turn to looking at things that we can do something about.

New Year’s resolutions are one tool that offers us guideposts as we begin the cycle anew. I ‘ve seen surveys that say more than half of adults make resolutions–yet, we know far fewer keep them.

The top two resolutions center on money and health. My goal is to keep things simple and realistic, focusing on resolutions for your finances.

I’ll offer you options. Some may seem simple, but the foundation of any financial plan must be built on the basics, the fundamentals.

Some may apply to you. Others may not. But I encourage you to grab ahold of what is realistic.

7 financial resolutions to get you started in 2021

  1. Make a budget. You won’t know where your money is going until you track your expenses. You might be surprised how much you spend on various items. You’ll also find ways to reduce some expenditures. That puts and keeps money in your pocket. Some of us have discovered we have been saving due to the pandemic. We miss restaurants, concerts, movies and sporting events. But what new habits have we learned in 2020 that we can carry over into the new year?
  1. Establish an emergency fund. Nearly 30% of Americans don’t have savings for an emergency. Start with the stimulus money Congress gifted you, and gradually save until you have at least three months you can set aside in the event of an emergency. Six months is optimal.
  1. Start or increase saving for retirement. Maybe you don’t think you can afford it. But let’s view this from another angle: When an unexpected bill comes in, we almost always seem to find a way to pay for it. If your car breaks down, you know you’ll need to get it repaired. Look at retirement as your car that needs to be fixed. One easy way is to sign up for automatic drafts into your 401k or IRA. Do you want to save 10% of your income? If that goal seems out of reach, start with baby steps—two or three percent of income will be your starting point. Then double it in April and increase it by the same amount in July. Continue every three months until you hit your goal. That’s how I began socking funds away for retirement.
  1. Pay down and pay off debt. You’ve created a budget, but debt continues to weigh on you like an anchor around your neck. You know the feeling. Put away your credit cards until they are paid off. Pay more than the minimum balance and focus on high-cost debt first. When one card is paid off, put that payment towards your next loan. You’ll be surprised at the headway you’ll make.
  1. Keep debt reasonable. If you have all your credit card, student and auto loans paid off, you are ahead of the game. But just because you can borrow doesn’t mean you should. Keep monthly outflows for your home below 28% of your pretax income and your total monthly debt payments (including credit card, mortgage, auto, and student loans) below 35% of your pretax income. These principles will help keep you on sound financial footing.
  1. Contribute to a cause near and dear to your heart. Consider incorporating regular financial gifts toward your favorite charity or charities. Can you set up an automatic draft? If so, even a few dollars each month means you will be making a difference. Or, you may choose to volunteer your time.
  1. Get your affairs in order. Finish setting up a will or trust, update your beneficiaries, update life insurance, and consider a living will. A living will reflect your preferences to close family or friends regarding end-of-life medical treatment. Also, consider a durable power of attorney, which allows someone to make health-care decisions for you if you are incapable of doing it yourself.

The seven resolutions are simply guidelines and suggestions. Does it seem overwhelming? Then focus on one or two. Or, grab hold of the ones that apply to you and tackle one per month.

As we always remind you, we are here to assist you, encourage you and point you in the right direction. If you have questions, we are no further away than a phone call or email.

As always, I’m honored and humbled that you have given me the opportunity to serve as your financial advisor, and I want to wish you a happy and prosperous New Year!

Ron’s Market Minute — What Went Right?

A large chunk of the investing public pulled out of, or reduced their equity exposure at the beginning of 2021. That 2% drop on the first day of trading certainly scared the people who watch the markets on a daily basis. And I believe the expectation was that the great fear of a potential market drop on Jan 6th could have been quite the buying opportunity. But…

Something went RIGHT on Jan 6th. Even Murphy can be wrong sometimes.  Markets blazed upwards and are continuing their flight as I write this on Thursday before market close. 

What was it that investors were really in fear of? Was it that, if the Dems produced their hoped-for ‘Blue Sweep’, they would then set about raising taxes? Well, perhaps. But what about the potential break in taxes if the Blue Wave gets surfed by a change in local and state tax deductibility? Could happen. Remember that- the winners write (and can change) the rules.  And the Dems are promising a huge stimulus package for (not just the average guy, but) to states and small businesses as well. My opinion is that the GA election solidifies the idea that there will be more money flowing to people to tide them over till they receive their vaccines. No wonder retailers soared on the 6th. I stared in disbelief when I saw an 8-point move in Target (TGT) and Dollar General (DG). And then Bed Bath (BBBY) bumped 6 and Best Buy was up 3. So, what if the stimulus can be also seen as ‘fairy dust’ or ‘helicopter money’, it is still liquidity! At least for now.

AND we got at least a small bump in interest rates. Financials were the 2nd worst sector in the US market in 2020. We loved Fintech and banks that were light on assets, but now (like right now!) the money is moving back (finally!) to the big banks and regional financial centers. 

So that brings me to my point for today. Last year was actually an excellent investment year for our clients, primarily because we have stayed with our strategy of relative strength, and stayed with the strongest sectors of the market. That in part is why our clients’ holdings of clean energy and alternate energy are having a great year this week. We will continue to follow our strategy and expect that (no guarantees of course) clients will fare well versus the indexes in 2021.

One last thing. You (our valued clients) have given us the mission of overseeing your investments — and we take that responsibility very seriously. That is why I am quick to add, ‘we can’t do it without you”. It is of vital importance that we occasionally review your circumstances and portfolio strategies to ensure that you understand what we’re doing for you, that you’re comfortable with our work, and that the strategies we employ on your behalf are still appropriate for your life circumstances. SO, if your personal life circumstances have, or will soon change, or you’d like a review of the strategies we employ for you, or anything else about your portfolios, please call or email the office to arrange a time to visit, either in person, by phone, or by video chat.

We look forward with renewed optimism to the new year with you, and wish you a successful and happy 2021!

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk
www.denkinvest.com

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Ron Denk is a Registered Representative, offering investments through Lincoln Financial Securities Corporation, Member FINRA/SIPC.

Mr. Denk is also an Advisory Representative offering services through Denk Strategic Wealth Partners, a Registered Investment Advisor. Denk Strategic Wealth Partners is not affiliated with Lincoln Financial Securities Corporation.

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Past performance is not a guarantee of future returns.