Gearing up for another great year!

With 2012 right around the corner, I want to talk about some simple steps you can take right now — or in the New Year — to greatly improve your financial life.

In fact, I suppose you could call each of these a financial “New Year’s Resolution.”

Let’s start with a simple one …

Resolution #1:
“I am NOT going to accept paltry yields for another year!”

While the calendar has switched years yet again, you’d never know it by looking at the interest rates posted in your favorite newspaper or at your local bank.

In fact, CDs, savings accounts and money market funds have been handing investors practically nothing for much of the new millennium.

Sure, there are reasons to believe this has to change sometime … but why wait at all? Why risk earning practically nothing for yet another year or two?

After all, there are plenty of dividend-paying stocks that are currently handing out safe, steady yields of 5 percent, 6 percent, even 7 percent and higher right now. There’s nothing stopping you from putting at least some of your nest egg to work in them immediately.

In fact, at this Sunday’s VIP investment conference, I’ll be telling members about one conservative Master Limited Partnership that is currently handing out more than 8 percent a year!

Resolution #2:
“I’m not going to take big risks with my money!”

Some folks have probably been avoiding dividend stocks because they consider them “risky.”

Given the stock market’s gyrations lately, I understand why they might think that. And I’ll be the first to say that stock prices can — and do — decline sometimes.

However, let me give you a quick rundown of how the two portfolios I currently run did this year …

For starters, my long-running Dividend Superstars picks had posted a 6.1 percent total return from the beginning of the year through December 19 even as the S&P 500 was DOWN 3.3 percent over the same period.

That means we outperformed the market by more than nine percentage points — something most fund managers would kill to do.

Meanwhile, over the same timeframe, my dad’s actual income portfolio — the $100,000 that I’m helping him invest in a Vanguard IRA — gained more than 4 percent. In other words, it also handily beat the stock market.

And I should note that we had practically half of dad’s money in cash the whole time, too!

So if you still think all stocks are bad … or that it’s impossible to make money from dividend payers in down markets … well, just ask any of my Income Superstars subscribers … or even my own dad.

[Editor’s note: At just $39 a year, and given Nilus’ amazing track record, you should definitely consider subscribing to what is definitely one of the best values in the investment newsletter universe.]

Resolution #3:
“I am going to budget wisely!”

At the end of every year, my wife and I sit down and look at our family finances — both what we spent last year and what we plan on spending this coming year.

Is it a fun exercise? Certainly not for my wife. Heck, only a number-crunching nerd like me would like such a task!

Still, it helps us prioritize our lives and it ensures that we’re on the same page for the coming year. And whether you have a large family or you’re on your own, I encourage you to start keeping a budget of your own starting this year.

It might seem restrictive, but having defined parameters for your spending is actually quite liberating. No more feeling guilty when you buy something. No more “credit card hangovers.” Plus, with a little planning and discipline, you’ll surely find new ways to save more money over the long-term.

You don’t have to get too elaborate if you don’t want to. Simply start by figuring out what you’ve been spending on major categories like food, energy, vacations, and clothes …

Project how much you think you’ll earn in the coming year …

Then, going forward, keep track of your expenditures — no matter how big or small. Many credit card companies will allow you to download those charges right into an Excel spreadsheet. There are free budgeting programs available online now. Heck, you can even use a pen and paper!

It doesn’t matter how you keep track. A year from now you’ll have a great sense of where you’re throwing away money and what big-picture categories you might want to spend more on.

And on a related note, here’s …

Resolution #4:
“I’m not going to pay more taxes than I have to!”

A great side effect of having a solid budget in place is that other parts of your financial life also become clearer. Not only does it get easier to save and invest, it also gets easier to plan for your tax bills.

And when it comes to Uncle Sam, my philosophy is simple: Pay the bare minimum.

No, I’m not saying you should cheat the government out of money that you legitimately owe.

Rather, I’m advocating the use of every single credit and deduction available to you. I’m suggesting that you plan ahead and shift income to your advantage wherever possible. And I’m arguing that you make your investment portfolio as streamlined and tax-efficient as it can be.

Given our convoluted system, it simply takes a little bit of research and planning to save some money on your future tax bills.

In fact, a little research and planning is all it takes to accomplish everything I outlined today. So with a little resolve there’s no reason you can’t make 2012 your safest, most profitable year yet!

Best wishes and have a happy New Year,


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About the Author: Money and Markets - Nilus Mattive

Nilus Mattive, a financial analyst at Weiss Research, is the editor of Dividend Superstars, a monthly publication and is also the editor of the company’s daily e-letter, Money and Markets. Formerly a senior editor of Standard & Poor’s The Outlook, the oldest continuously published investment newsletter in the country, he has written for a number of investment websites, including BusinessWeek and Individual Investor. Mr. Mattive is the author of The Standard & Poor’s Guide for the New Investor (McGraw-Hill, 2004) and has appeared on the popular investment radio show, Traders Nation, to discuss his views on personal finance. Mr. Mattive graduated cum laude from the University of Scranton.