Review your investment portfolio regularly; keep these steps in mind

It's a crucial step in managing your wealth and securing your financial future

Whether you're an experienced investor or just starting out, taking the time to thoroughly evaluate your portfolio can uncover opportunities and help you make informed decisions about your finances.

 

What is a portfolio

 

It is a collection of investments held by an individual or an entity. An investment portfolio usually combines various assets such as stocks, bonds, and real estate.

 

There are several key steps to effectively reviewing your investment portfolio:

 

Have your goals, risk tolerance, or time horizon changed since your last review? If yes, update your target asset allocation and investments to realign with your new situation.

 

List your investments

 

The first step is to compile a comprehensive list of all your investment accounts and assets. This includes your stocks, bonds, mutual funds, real estate or any other investments you hold. Gather statements, login information, and other documentation to get a complete picture of your portfolio.

 

Asset allocation

 

Over time, market movements can cause your portfolio's asset allocation to drift from its original targets. During a review, check if your mix of stocks, bonds, and other assets still aligns with your risk tolerance and investment timeline. Rebalancing by buying or selling assets may be needed to restore your preferred allocation.

 

Diversification

 

Having a diversified portfolio can help manage risk. Look at how your investments are spread across different sectors, geographies, and asset classes. If you're overexposed to one area, consider adjusting your holdings to regain an appropriate level of diversification.

 

Investment costs

 

Investment fees and expenses can eat away at returns over time. Check if you're holding any high-cost products and explore whether lower-cost options are available for similar exposure. Even small fee differences can substantially impact long-term growth.
 

Review tax implications

 

Consider the tax implications of your holdings and any potential strategies to minimize your tax burden.

 

By making portfolio reviews a regular practice, investors can help ensure their assets remain well-positioned to pursue their financial objectives over time. As the markets fluctuate, reassessing and adjusting course can protect your investments.