Looking to update your financial plan for 2026? Below are ten strategies you might consider.

1. Gaining control. January is a good time to audit your investments. I’d start with one very basic step: If you have accounts at multiple brokerage firms, see if you can consolidate them. This won’t necessarily lead to better investment results, but if you have fewer accounts, it’ll be easier to monitor and manage them. This might not seem like an important exercise, but in my experience, investors often find long-forgotten investments, overpriced funds or unintended cash balances when they conduct an investment clean-up like this.

2. View from the top. The most common question investors asked in 2025 was some version of, “With the market so high, should we get more defensive?” To make this determination, I suggest looking at your portfolio through two lenses. First, total up the dollars you hold in relatively stable assets, including bonds and cash, then assess that total relative to your cash needs over the next several years. That’s the first lens, and it’s what I might call the “calculator answer,” but it’s incomplete on its own. Of equal importance is to ask how you would feel if the stock market dropped, even if you had sufficient cash and bonds to carry you through a downturn. To answer this question, total up how much you hold in stocks and ask how it would affect your state of mind if you saw that number cut in half. While a 50% decline is a low likelihood at any given time, declines of that magnitude have occurred more than once, so it’s the rule of thumb I suggest.

3. Looking forward. The stock market in 2025 was a roller coaster. Early in the year, it dropped nearly 20%, but by year-end, it had gained nearly 20%. As we turn our attention to 2026, what should investors expect? On this question, Benjamin Graham offered this useful advice: “In the short run,” he wrote, “the market is a voting machine, but in the long run it is a weighing machine.” Anything could happen this year, in other words. But over longer time periods, it’s logical to expect the market to follow corporate profits higher. That’s Graham’s weighing machine. And that’s why, whatever the news of the day happens to be in 2026, we shouldn’t let short-term fluctuations shake our faith in the long term.

4. Past and present. Staying focused on the long term is sometimes easier said than done. That’s why I recommend this thought experiment: Imagine going back in time to January 2016. How many of the events we’ve experienced over the past 10 years—from the pandemic to wars to unexpected election results—could any of us have predicted? The reality is that it’s very difficult to know which way things will go. Even when a trend seems to point decisively in one direction, we should be careful to never bet too heavily on any particular outcome. As British economist Elroy Dimson has noted, “more things can happen than will happen.” For that reason, the ideal portfolio, in my view, is one that wouldn’t vary too much in response to short-term news.

5. A tough task. There’s a story about Benjamin Graham that tells us a lot about the wisdom of picking stocks. One day in 1926, Graham was reading through a company’s financial statements when he spotted what he thought might be an opportunity. To be sure, though, he had to take a train to Washington and sift through data available only at the office of the Interstate Commerce Commission. Graham confirmed it to be an almost no-lose situation, but it was one that other investors had overlooked because the information was so inaccessible. But today, that sort of information would be readily available online. That, in my view, makes stock-picking now much more of an uphill battle than it was in Graham’s day, 100 years ago. The most recent data point: In 2025, nearly three-quarters of actively-managed funds trailed their benchmarks.

6. Clear math. In a 1991 essay titled “The Arithmetic of Active Management,” Stanford professor William Sharpe made this simple observation: “…it must be the case that (1) before costs, the return on the average actively-managed dollar will equal the return on the average passively-managed dollar and (2) after costs, the return on the average actively-managed dollar will be less than the return on the average passively-managed dollar.” That’s because actively-managed funds are usually more expensive than index funds. Because of their fees, in other words, actively-managed funds are at a fundamental disadvantage to their index-based peers, and that’s a key reason they tend to lag. According to a December analysis by Morningstar’s Jeff Ptak, Sharpe’s observation from 1991 still holds true. In fact, he found that “fees appear to have gotten even more predictive.”

7. Worthwhile switch. These days, a growing number of mutual funds are allowing shareholders to convert their holdings to equivalent ETF shares. If you have the opportunity to convert mutual fund shares you own, I recommend it, for two reasons. First, ETF fees are usually lower. Of more significance, ETFs are inherently more tax-efficient. While both mutual funds and ETFs are required to distribute income out pro rata to shareholders, ETFs usually incur fewer capital gains because they allow for “in kind” redemptions, which don’t require fund managers to liquidate holdings.

8. Second best. You may have read about new rules that’ll allow 401(k) accounts to invest in private funds. Are these a good idea? While every fund is different, author William Bernstein offers a perspective I find helpful: “The first people who invested in private equity got the filet mignon and the lobster tails, and the Vanguards and Fidelities of this world are going to wind up with tuna noodle casserole.” That isn’t a rule, but in my opinion, it may be more true than not.

9. “Why” investments. Some private funds have been converting into publicly-traded vehicles. How should investors think about them? The Wall Street Journal’s Jason Zweig addressed this question recently. These funds, he observed, “cast doubt on Wall Street’s narrative that investors can have their cake and eat it, too. You can have the mild price fluctuations of nontraded assets, or you can have access to your money whenever you want—but it’s turning out that you can’t have both.” Down the road, these funds might become reasonable investments, but they fit into an investment category I call “Why?” If you can earn reasonable returns with simpler, more proven types of funds, why burden yourself unnecessarily with a new type of risk?

10. All sides. A key challenge in investment decision-making is the fact that each of us tends to have our own way of looking at things. Some are more quantitative while others are more qualitative. Some are more aggressive while others are more cautious. And so on. That’s a problem because financial decisions usually require a blend of perspectives. That’s why I recommend a “five minds” approach to financial questions. Instead of coming at a question from only one direction, consider how an optimist, a pessimist, an analyst, an economist and a psychologist might look at that question.​