Editor’s Note: The day after Christmas – December 26^th – is affectionately known as “Boxing Day” in many parts of the world. A holiday of sorts, it is named for the gift boxes that employers would give to their employees.

It is a custom that dates to the Middle Ages. It is believed these gifts were modest and made to the servants and tradesmen that toiled under much wealthier noblemen.

There may have been a time when the traders and analysts that worked on Wall Street were viewed as little more than subjects of their much wealthier overlords. If so, those days are long gone.

Role Reversal

In fact, the relationship has reversed. Top-tier traders and analysts command enormous salaries and are held in higher regard than the brokerage firms that employ them.

Of course, instead of getting modest presents in gift boxes, these titans of Wall Street receive bonus checks in the millions. Even during a down year for the stock market.

All the major stock market indexes are at or near record highs. This year’s version of Boxing Day in lower Manhattan should be a particularly generous one.

But who is really the giver of these extravagant gifts? Is it their employers, feeling charitable and happily divesting themselves of a small fortune every year to keep these valued employees in the fold?

I don’t think so. Technically, the money comes from them. But in reality, the firm acts as little more than a pass-through vehicle. It tracks the fees these employees generate and keeps a portion for itself before passing on the remainder.

Investor Resolutions

In truth, the givers of these gargantuan-sized bonuses are their clients. They supply the capital that ultimately ends up being spent on the products and services those Wall Street firms produce.

To be clear, that isn’t necessarily a bad thing. Most of them are what keep our world-beating economy humming. But is it really necessary?

It isn’t. Ensuring your financial well-being should be your top priority. You need to take control of your financial affairs to do that.

As you work on your list of New Year’s resolutions, there are some things you should resolve to do every year as an investor. Here are the “big three” in my book.

Know What You Are Buying

First, you need to know what you are buying. Most investors I talk to have only a basic understanding of what was in their portfolios.

Often a client would ask me to review their “stocks.” But all I’d see are packaged products like mutual fund and annuities. When I pointed out they didn’t own any stocks, they said they were all the same thing in their mind.

Hopefully, you already know that there are many significant differences between stocks, mutual funds, and annuities in terms of cost, liquidity, and tax consequences. If you don’t, then that is the first thing you should resolve to do in 2025.

Have Clearly Defined Objectives

Second, you need to have clearly defined objectives for your investment strategy. When I asked clients for their investment objective a typical response was, “Well, I’d like to make as much money as I can.”

Okay, I think we can all agree on that. But how much risk are you willing to take to achieve that return, and how soon will you need that money? Most importantly, how much of that money are you willing to lose if the market performs badly?

Those are difficult questions that require serious consideration. A trusted financial advisor would be a good place to go for that conversation if you don’t feel capable of mapping it out on your own.

Use a Single, Coherent Approach

Third, you should use a single, coherent approach to managing your portfolio. That way, it doesn’t end up becoming a mishmash of stuff you read about on the internet, heard about from a friend, or was pushed on you by a commission-driven salesperson.

There’s a chance that may work, but if probably won’t. It is virtually impossible to accomplish proper portfolio diversification and risk mitigation if each component of your portfolio is selected independently of the others.

Even though these three things may seem obvious, I’d estimate that about three-quarters of the clients I met with could not honestly say that had achieved all three.

In fact, less than half of them had even gotten two of them right. Knowing what to do, and actually doing it are often two very different things.

As you uncork the bubbly next week, resolve to accomplish those three objectives in 2025. If you can do them, it should be a very happy new year indeed!

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