Financial guru Rachel Cruze is an investment whiz — and she’s constantly doling out advice so others can get on the same page. In a recent video on her popular YouTube page, she broke down her annual investment routine.
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Here are the five things Rachel Cruze says you should do with your investments every year.
Annual Review With a Professional
Every January, Cruze and her husband sit down with an investment professional to review their investments from the previous year and plan for the upcoming year.
Why it’s important: An investment professional can provide expert guidance, help you see things from a different perspective and potentially suggest changes to optimize your investment strategy.
How to apply this: Schedule an annual meeting with a qualified financial advisor or investment professional to review your portfolio and discuss your financial goals.
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Max Out Retirement Accounts Early
At the beginning of the year, Cruze and her husband aim to max out their Roth IRAs and 401(k)s as early as possible, ideally in January.
Why it’s important: Contributing early in the year allows investments to potentially grow for a full year, maximizing the power of compound interest (which are arguably the two most beautiful words in the English language!).
How to apply this: If you’re able to, front-load your retirement contributions early in the year. If not, set up automatic contributions throughout the year so you’re consistently investing. Consistency is key!
Utilize Separate Retirement Accounts
Cruze and her husband maintain separate retirement accounts, including individual Roth IRAs, 401(k)s and health savings accounts.
Why it’s important: Having separate accounts is great for couples. It allows them to maximize their retirement savings by taking advantage of contribution limits for each individual. Win-win!
How to apply this: If you’re married, ensure both you and your spouse are maximizing contributions to your own retirement accounts where possible.
Focus On Long-Term Growth
Instead of obsessing over daily market fluctuations, Cruze and her husband review their investments annually and leave it at that.
Why it’s important: If you’re checking your investments frequently, it’s easy to get caught up in market changes and feel that you need to change your strategy. Instead, try to not check as often and focus your efforts on long-term growth.
How to apply this: Hide your login! Resist the urge to constantly check your investment accounts and, instead, put a date on your calendar to check in annually.
Consider Advanced Strategies (for High Earners)
For those in their building wealth era, Cruze mentions using strategies like the “backdoor Roth” for high earners who exceed income limits for direct Roth IRA contributions.
Why it’s important: This allows high-income earners to still benefit from the tax advantages of a Roth IRA.
How to apply this: If you’re a high earner, consult with a tax professional or financial advisor to determine whether advanced strategies like the backdoor Roth are appropriate for your situation.
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This article originally appeared on GOBankingRates.com: Rachel Cruze: 5 Things To Do With Your Investments Every Year
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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