Smart Women Smart Money | Harris & Harris Wealth Management

Happy New Year, 2014 has come! As one-year ends and a new one begins, many feel it is a great time to renew, refresh, and re-start in different areas of their lives. It’s like you have a new opportunity to get it right. A good friend of mine continually reminds me that I create the life I envision and my thoughts determine my success.

As you think about making changes within your life for 2014, I hope the one item on your list is your finances. Especially if you see that, what you’ve done hasn’t worked successfully for you.

I am a big proponent of visualization. I believe everything starts with a vision of what you want to achieve. If you don’t have a vision, then how do you know where you are going? That’s what I’ve heard and I believe there’s something to it. Take a day or so to think about your vision for the year.

Now that you have a vision, write it down. Why?  Because as written in the book, Go Giver, it states what you focus on is what you get. Start with your overall vision for the year. Then break it down into 12 goals or steps, one for each month. Each step should lead you to reaching your year-end goal. If you don’t get there, I believe you will be very close. But honestly it doesn’t really matter what I believe, it’s what you believe will happen.

This year, I decided I wanted to focus on women growing their 401(k)s. Here is an infograph that shows the path towards becoming a 401(k) Millionairess. The S&P ® is widely regarded as the best single gauge of the overall performance of large companies in the U.S. and for 2013, it’s return was over 32%. I want you to evaluate your 401(k)’s portfolio return in comparison to the performance of the S&P. How well did you do? Now, I understand that most investors wouldn’t put 100% of their portfolios in the S&P index because of their personal tolerance to the risk of losing money. However, there are still women who may be too conservative and haven’t re-allocated their retirement portfolio back into stocks because of the loses experienced during 2008.

So I’m going to share advice from Warren Buffet, the famous billionaire investor. He suggests that investors should do the following:

1. “Don’t put your money in [the stock market] all at once; but do it over a period of time.” This is another name for dollar-cost averaging. This is what you do each pay period when you add to your 401(k) and/or investments.

2. “The one thing I will tell you is the worst investment you can have is cash. Everybody is talking about cash being king and all that sort of thing. Cash is going to become worth-less over time. But good businesses are going to become worth more over time.”

I feel this is great advice to use as you work towards your goal of becoming or staying a 401(k) Millionairess.