Seven in 10 experienced investors in a new survey from E-Trade Financial reported that they were satisfied with how they managed their investments during an uncertain and volatile year.
Half of survey participants said that remaining steadfast in their long-term plan was the top financial lesson they learned in 2020. Nineteen percent said they had learned it is better to strategically move in and out of the market, and 15% had learned the importance of saving for an emergency fund.
As the year comes to a close, 38% of self-directed investors said they planned to use an online tool to review their portfolio, while 35% said they would do so to contact an advisor.
Thirty-three percent of investors said their top financial resolution for 2021 is to use online tools to diversify their portfolio and help meet goals. Thirty percent resolved to seek the help of an investment professional.
“The year kicked off with a market shock that may define a generation in COVID-19, and as a nation we then experienced a social movement of monumental proportions in the fight for equality, only to cap the year with the most contentious election in modern history,” Mike Loewengart, E-Trade Financial’s managing director of investment strategy, said in a statement.
“And these next few months may continue to see pronounced volatility as markets balance winter virus woes with vaccine developments.
“In spite all of this, it’s encouraging to see investors tune out the noise and remain focused on long-term investment goals. In this environment, a properly diversified portfolio across asset classes is a powerful way to help smooth out unpredictable market conditions.”
Dynata conducted the online survey from Oct. 1 to Oct. 13 among a U.S. sample of 842 self-directed active investors — 60% men, 40% women — who manage at least $10,000 in an online brokerage account. A third each trade more than once a week, less than once a week but more than once a month, and less than once a month.
Insights for Investors in 2021
Loewengart suggested that investors get in the habit of reviewing portfolios annually to determine whether their saving goals and investments are on track, as major life events can change one’s financial circumstances.
“A portfolio rebalance may also be appropriate to help investors stay aligned with their financial goals and risk tolerance,” he said.
Revisiting retirement plans annually also is important so investors understand how much they will need to accumulate, see where they currently stand and make any adjustments to stay on track, Loewengart said.
He noted that a financial advisor can help those who are looking to create a plan. Or they can explore IRA selector tools and retirement calculators offered by many online brokers designed to help investors determine what type of account may fit their needs.
Finally, reviewing 2020 transactions before the end of the year may help investors identify opportunities to lower their tax bill, according to Loewengart. Realizing tax losses at year-end can reduce taxable income.
Online brokers offer FAQs, tools and resources to help investors prepare for tax season. And a tax or financial advisor can help review portfolio gains and losses and advise on moves to make based on an investor’s specific tax situation.
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