You may be in the midst of planning for Christmas, but soon your thoughts will turn to 2016 and all you’d like to accomplish in the new year. We’re here to help with our annual roundup of planning suggestions, an easy-to-navigate collection of ideas grouped by SMI’s overarching topics: spiritual growth, strengthening your financial foundation, developing your investing plan, broadening your portfolio, and looking toward retirement. Our prayer is that with help from these suggestions, you’ll end up with a plan for your best year ever!

[If you choose to print out this article, we recommend downloading the printer-friendly PDF version, which includes the month and page number for each referenced article.]

It’s been an interesting year in the markets, bringing to mind something a professional pilot once said. “Flying long-distance routes involves hour upon hour of mind-numbing boredom,” he explained, “interspersed with moments of sheer terror.”

For investors, the first half of 2015 was about as boring as it gets. On January 2nd, the first day of trading of the new year, the S&P 500 opened at 2,058. Six months later, on June 30th, it closed at 2,063. And the journey to that whopping five-point gain was as boring as you might imagine. The market traded in one of its narrowest ranges in history.

But after a calm July, volatility returned in August. The market shuddered through its first correction (a decline of at least 10% from the market’s most recent high) in four years. On one particularly painful day, August 24th, the Dow shed more than 1,000 points (8%) soon after it opened. However, within a couple of weeks, the clouds parted and the volatility vanished.

Month after month of mind-numbing boredom, interspersed with moments of sheer terror.

When you’re new to investing, it’s easy to make the mistake of imagining each past year’s market performance as the product of a straight, smooth journey from January to December. You hear about a year such as 2013 when the market was up 33%, and perhaps assume it was smooth sailing all along. Or you find out about the small gain SMI’s Dynamic Asset Allocation strategy managed to pull off in 2008 a year when the overall market lost more 37% and imagine that it shielded investors from any pain all year long.

In reality, 2013 was the year of the horrendous Boston Marathon bombings that killed three people and injured hundreds. On that horrible day, April 15th, while uncertainty lingered as to who was behind the crime, the market fell nearly two percent 265 points. How confident do you think investors felt that day?

As for DAA’s performance in 2008, although the strategy hadn’t been introduced yet, back testing shows it would have had six consecutive losing months—losses that had the strategy down nearly 12% before a strong finish propelled it to a small gain for the year.

Completing a football game requires four quarters, and each is important. Similarly, it takes all four quarters to determine how the stock market will finish a year, and each can be quite different from the others.

But unlike football, stock market investing is more than a four-quarter pursuit, which is why we stress the importance of being a long-term investor rather than a short-term trader. We claim no ability to foresee the future, and encourage you to turn a deaf ear toward anyone who does (Of 67 economists polled at the start of 2014, all 67 predicted an increase in interest rates over the following six months. Rates fell.) Our strategies are based on purely mechanical, objective criteria designed to keep you in the game when others are being lulled into complacent sleep by a boring stretch, and to help you sleep peacefully when fear is keeping others up at night during downturns.

We “err” toward advice that is timeless, not trendy. Above all else, SMI encourages you to live by the principles taught in the Bible, the ultimate source of unchanging, protective truth.

With that in mind, what follows is our annual checklist of actionable ideas, based on SMI articles published this year. Each idea is accompanied by a footnote (or a link if you’re reading online) indicating where to find more information for example, Dec:178 means our December 2015 issue, page 178.

Put a checkmark next to the ideas that seem particularly applicable to your situation. Then, go back through your checked items, select your Top 10, and rank them based on their importance. Some ideas may lead you to set new goals for 2016, while others may be important in helping you achieve existing goals.

If you’re married, you may find it helpful to go through this process separately at first. Then, compare notes and agree together as to which financial objectives are most important and how you will go about pursuing them.

SMI’s “Top 10” approach to planning for the year is intended to be a spiritual exercise as well as a practical one. After all, God is the owner of everything (Psalm 50:10-12); we are His managers (Matthew 25:14-30). So approach this planning time prayerfully, thanking the Lord for His faithful provision in the past and expressing your trust in Him for the future. In 2016, we pray you will “prove faithful” in wisely managing all that God has generously entrusted to your care (1 Corinthians 4:2). It is our purpose and privilege to help you do that.

The purpose of money

Before you set financial goals for the New Year and establish financial priorities, it’s essential to remember what managing money well is all about. It isn’t primarily about the return generated on your investments or making sure you have enough to provide for your family in your later years, as important as those objectives are. It isn’t even mostly about how much money you give to support God’s Kingdom work, as important as that is.

Managing money well is about glorifying God. So before looking at the practical applications of God’s Word in the areas of saving, investing, estate planning, and more, let’s reflect on this bigger picture.

Increase your dependence on God. We all long to make a difference. The desire to do great things often guides the goals we set for the New Year. But what if you don’t feel capable of doing what you sense God calling you to do? What if you feel inadequate to the task? That may be exactly how God is preparing you for the vision He put on your heart. To be more useable by God, you must become more dependent on God.

Understand God’s intentions for you. For some people, the holidays are not a time of hope. They’re a time of regret or discouragement. Remember, God is committed to “doing good” in you. In fact, He rejoices with all his heart and soul in doing so (Jeremiah 32:40-41).

Remember, it isn’t up to you alone. The most important stewardship verse in the Bible may well be Galatians 5:16: “So I say, live by the Spirit, and you will not gratify the desires of the sinful nature” (NIV). It is only by the Holy Spirit’s power that we can do as the Bible instructs regarding financial matters and everything else. It is the Holy Spirit working in and through us that allows us to experience perpetual, pleasant productivity. Any fruit we bear is not a matter of what we’re doing for Christ, but of what He is doing through us.

Manage your most valuable assets. Three of your most important “personal asset classes” are spiritual, physical, and relational. How strong is each one? What’s the biggest threat to each? What is the one step you could take in the coming year to help your personal portfolio grow?

Focus. Many things compete for your time. Lots of activities fill your calendar and to-do lists too many to accomplish. There’s wisdom in narrowing your lists to what’s most important. If you had to choose one word to encapsulate all that you sense God calling you to in the New Year, what would it be?

Bring the same level of focus to your finances. While we’re encouraging you to pick 10 ideas from this article, it’s important to prioritize them so you can focus your energies and accomplish them one at a time.

Level 1 Strengthening your foundation

Plan to succeed. The mere mention of the word “budget” makes many people cringe. Some talk about a budget as something you go on, like a diet. Others think of it as being about “less” obsessively spending less on everything, having less freedom, and enjoying less fun. But a budget isn’t something you go on; it’s a tool you use to manage money well. And it isn’t about less; it’s about more having more knowledge about where your money is going, so you can be more proactive in your use of money, so you end up having more for what matters most. Is 2016 the year you finally get on the budget bandwagon? If so, prepare to be pleasantly surprised that a budget is easier to set up and use than you may think. It involves just three key steps: planning, tracking, and reviewing.

Give some away. For followers of Jesus, generosity is a financial priority (Proverbs 3:9). However, there are significant roadblocks to living the generous lives we were designed to live. There’s fear. (“How will we be able to pay our bills if we give money away?”) And there’s the pull of the culture. (How many times have you heard the advice, “Pay yourself first”?) It may help to take a step back and recognize how truly rich you are.

From a practical perspective, giving isn’t something that will just happen. If you’re to live generously, it’s essential to plan your giving.

As you get older and transition from generating income from your work to taking income from your retirement savings accounts, new generosity-related questions may arise. If you gave from the income you earned throughout your career—income that enabled you to save for your retirement—should you also give from the income your retirement savings are now generating? For perspective on generosity’s “gray areas,” consider the thoughts of one who has been studying biblical money management for many years.

Establish an emergency savings fund. The Bible teaches that part of good stewardship is maintaining a reserve of savings (Proverbs 21:20). As for how much you should save, it depends (to a degree) on your circumstances. But there are widely agreed upon rules of thumb.

Build walls of protection by reviewing your insurance coverage. Proverbs 27:12 cautions, “The prudent see danger and take refuge, but the simple keep going and pay the penalty.” Many financial dangers are lurking. Smaller ones typically can be managed with an adequate emergency fund. For bigger dangers, such as the death of your household’s main breadwinner (especially if you have minor children), insurance can help. Life insurance comes in two major types: whole life and term. Making an informed life insurance decision is essential if you are to get the right coverage at the right price.

Homeowner’s and vehicle insurance can protect against other major financial risks, but there are limits as to how much protection they can provide, especially when it comes to your potential liability for other people’s losses in an accident you cause. You may need the additional protection provided by an umbrella liability policy.

Manage your financial reputation. Proverbs 22:1 teaches, “A good name is more desirable than great riches; to be esteemed is better than silver or gold.” Your financial reputation boils down to a three-digit number known as a credit score, and that number can affect everything from the interest rate you get on a mortgage to how much you pay for insurance. Many aspects of credit scores can be confusing, so it helps to understand how credit scores are calculated and where you can obtain yours.

Establish priorities retire the mortgage or invest for retirement? Some financial teachers suggest paying off your mortgage as early as possible, even if it means waiting years before contributing to your retirement plan. While it makes sense to wipe out your mortgage at least by the time you retire, running the numbers shows that sometimes it makes sense to begin investing for your later years at the same time that you’re working on retiring your mortgage.

Level 2 Developing your investing plan

New investors, start now. Implementing an investment plan based on SMI’s strategies is easier than you may realize. You don’t need to wait until you have a lot of money. In fact, you could get started with as little as $500. We’ll guide you toward the best strategy for your goals and circumstances, help you determine your optimal stock/bond allocations, and suggest the best broker for implementing your strategy of choice. Along the way, we’ll help you focus on the “right” overarching investing decisions.

Experienced investors, review. The end of a year is a good time to examine your investment strategy, tallying its performance and making sure it is well suited to your life-stage, goals, and temperament.

Keep in mind the importance of context when evaluating a strategy’s effectiveness. That includes understanding how much your initial experience with it may color your view and recognizing that even strategies designed to protect against loss, such as DAA, will experience declines from time to time.

Reviewing your strategy’s long-term track record helps foster a long-term perspective. And make sure you understand the rationale behind the strategy’s design, such as Fund Upgrading’s inclusion of both growth- and value-stock funds.

Minimize the “spectre” of bond investing. The investment media spent much of 2015 speculating about the timing of an interest-rate hike, which made the bond market more volatile than usual. Investors have to grapple with the question of how the bond market will perform in a rising rate environment. That makes this an ideal time to brush up on your bond basics, making sure you understand the important difference between yield and total return. If you haven’t done so already, it’s also an ideal time to familiarize yourself with SMI’s new Bond Upgrading strategy.

Look for ways to simplify. The SMI strategy with the most moving parts is Fund Upgrading, but you can take steps to simplify even that one, such as choosing to own fewer funds. Taking a “one-portfolio” approach to your investments viewing and managing multiple accounts as parts of a single portfolio can help simplify your financial life as well. For the ultimate in simplified investing, remember there are automated solutions available for all of SMI’s core portfolio strategies, including the newer 50/40/10 and Bond Upgrading strategies.

Manage risk. Investing always involves risk. While risk is unavoidable, it is manageable. The first step is to understand exactly what risk is and isn’t. Understanding the risk level of each SMI strategy can help you make better portfolio decisions. Investors also need to be cautious of getting in their own way, so look for any faulty thinking that may have crept into your investment philosophy. Challenge yourself to consider whether your guiding assumptions are investing facts or market myths. And as you seek to reduce risk, don’t succumb to the ironic risk of playing it too safe.

Be careful to whom you listen. The beginning of a new year can be an especially challenging time to be an investor. It’s when articles touting the forecasts of market “experts” are in ample supply. Choosing what not to take in can be every bit as helpful as choosing what to take in.

Be prepared for the next bear market. Investors spent much of 2015 preparing for an interest-rate hike, and also the possibility of a bear market. In both cases, the question isn’t whether each will occur, but when. As you prepare for the next bear market, keep your approach as objective as possible, and remember that even bear markets carry a silver lining.

Consider your college savings options. If you have a college-bound child under your roof, you’re probably already aware of 529 college-savings plans. But other college funding options exist that are worth considering.

Level 3 Broadening your portfolio

Look for hidden dangers. As noted earlier, risk comes with the territory of investing in the stock market. Sometimes, particular investment vehicles can add risk to your portfolio, as we saw with certain exchange-traded funds (ETFs) during the August correction. With SMI now regularly recommending ETFs, it’s important to understand why some ETF investors lost an unusually large sum of money during the downturn, why investors following SMI’s strategies were highly unlikely to have experienced a similar fate, and what you can do to protect yourself against these ETF-specific risks in the future.

Use the risk management tools available to you. SMI does its best to help investors manage risk through the diversification inherent in the design of our strategies. In addition, with Stock Upgrading, where investors have a choice of several funds in each of several categories, we publish relative-risk scores to help you make fully informed investment decisions. For even more diversification and risk management, consider combining multiple SMI strategies within your portfolio, which is how SMI's founder manages his portfolio.

Pursue better returns strategically and selectively. In addition to offering a variety of core portfolio strategies (each one could be used to manage your entire portfolio), SMI offers Sector Rotation as an optional add-on strategy for a small portion of your stock allocation. Investing in one particular market sector with a portion of your portfolio, while adding risk, offers the opportunity for significant rewards.

Level 4 Looking toward retirement

Don’t assume the automatic choice is best. 401(k)s and other retirement plans used by millions of employees increasingly are using “automated” techniques. Many employers now automatically enroll new hires in their plans, automatically increase the plan-contribution amounts withheld from paychecks each year, and automatically make target-date mutual funds the investment of choice for employees. Plan participants can override those defaults, and a careful examination of how target-date funds perform in a downturn may warrant taking a more hands-on approach to choosing your 401(k) plan investments. A common investment for many workplace retirement-plan participants is their employer’s company stock. Holding some of your employer’s stock can be fine. Holding too much can add undo risk. Find out if you have too much.

Consider your IRA options. There’s much to like about Roth IRAs. No taxes are due on money you withdraw in retirement, and if you don’t need the money, there are no required minimum distributions at age 70½ as there are with traditional IRAs. While you might believe you make too much money to qualify for a Roth, you may be able to fund such an account through a maneuver known as a “backdoor Roth contribution.” Whether you own a traditional or a Roth IRA, taking money out of the account prior to age 59½ usually will cost you in the form of taxes and penalties, but not if you know the rules pertaining to early withdrawals.

Manage your Uncle Sam retirement plan. Many older workers are hoping to fill in some of their savings gaps by working past the traditional retirement age. If that’s you, beware of potential unintended consequences, especially if you generate earned income and take Social Security benefits before your “Full Retirement Age.” Some financial advisors recommend you take future Social Security benefits into account when determining the proper asset allocation for your retirement portfolio. They suggest calculating a present value of that future income stream and considering it to be part of the conservative portion of your portfolio, thereby freeing you to take more risk with the rest of your portfolio. SMI generally disagrees with this approach, but it’s worth understanding the arguments for and against.

Get the lowdown on your drawdown. Building a nest egg sufficient to cover your retirement expenses takes many years and much careful planning. So, before you turn your savings into a monthly income stream, thoughtfully consider how much you can withdraw each year and choose wisely which assets you take first.

Get your estate planning papers in order. The only thing worse than paperwork is the lack of proper paperwork, at least when it comes to your loved ones left behind after you pass away. At the very least, you should have a will, but you might need a trust as well. That said, certain assets and financial accounts will pass to your heirs without having to pass through probate as long as you make sure your beneficiary designations and property titles are filled out correctly. This is especially important for IRAs. If you choose your beneficiaries wisely, the benefits of an IRA can expand exponentially.

If all of the above didn’t give you enough to think about and act on, review our summary of the articles from 2014!

Conclusion

What will 2016 bring for investors? We don’t know, and neither does anyone else. An important key to successful investing is knowing the difference between what you can and cannot control. Something you can control is the list of goals you decide to pursue in 2016. So choose 10 ideas from the ones just discussed the ones you sense would make the biggest difference to your financial life in the year ahead. Then commit to their faithful, prayerful pursuit—and trust God for the results.