New Year's resolutions are easy to make but tougher to keep, and one study found that only 8% of resolutions are successful. One of the most popular types of resolutions is to save or invest more money. We asked our analysts about the investing-related New Year's resolutions they made this year, and here are three they have every intention of keeping.
Matt Frankel: The New Year's resolution I have every intention of keeping is maxing out my Roth IRA.
In the past, I have had a bad habit of putting money into my taxable brokerage account first and treating my retirement accounts like a second priority. In fact, 2014 was the first year I was able to successfully max out my contribution, even though it took a lot of catching up toward the end of the year. So, this year I plan on putting the $5,500 maximum into my IRA, and contributing gradually throughout the year.
Quite frankly, it doesn't make any sense not to max out my Roth IRA first. The tax-free compounding will produce much better long-term performance with the exact same investments and will simplify my taxes each year in the meantime (no annual tax bill for dividends, etc.). Plus, money in a Roth IRA isn't as "tied up" as many people think. You are free to withdraw your contributions, but not any gains, at any time without penalty.
My plan for achieving this goal is to contribute $460 per month (about $5,500 divided by 12) into my Roth IRA before I put a dime into my taxable account, and I've already met my goal for January.
Todd Campbell: One of the most challenging aspects of investing is sticking to quality and admitting when we're wrong. Far too often I've found myself straying from best-in-breed companies in a bid to juice returns or riding a losing investment lower in hope -- and prayer -- of a reversal. Both of those actions have proved to be losing, rather than winning, strategies for me.
For that reason, the investing resolution I'm committing to keep this year is to double down on my homework and make sure that the reasons behind owning the stocks I buy are indeed reasons that make those stocks worth buying. Is the company in a position to be the market leader? Can the company's product or service be disruptive over the long haul? Is the management team rock-solid? Does the company have the financial firepower to invest, grow, and weather any storms? Answering those questions in 2015 should help me avoid buying second-tier companies and allow me to more objectively determine whether the catalysts supporting my investment in a losing position have changed or if they remain in place.
Globally, most investors are too concentrated in their home country's equities, which is called the "home country bias". It matters because the best-performing markets are frequently not in one's home country.
I've already started on my New Year's resolution. One of the best places to find stocks is in industries and sectors that have been crushed recently, as good companies get sold off just as often as bad companies, leaving opportunities for those who sift through the wreckage.
The worst-performing stock market last year was the Russian stock exchange, which fell 50% in 2014 as measured by the Market Vector Russia ETF (NYSEMKT:RSX). The Russian stock market is getting crushed as sanctions and low oil prices combine to ravage the Russian economy, which is heavily dependent on oil.
Many Russian stocks trade on U.S. markets. One great company that's been crushed with the rest of Russia is Yandex N.V. (NASDAQ:YNDX). Yandex is basically the Google of Russia and is also working to be the Yelp, Spotify, and Uber of Russia. Most of its non-search businesses are not major business drivers, with currently over 90% of its revenue coming from text-based search advertising. In Russia, Yandex holds a 60% market share on desktop search and 50% on mobile search. With the drop in share price, Yandex has been buying back stock, which should help results improve above and beyond its 30% expected growth.
I need to do more work to fully understand Yandex, but on the face of it the company looks like a great place to start fulfilling my resolution.