Periodically evaluating your investments is crucial for maintaining a healthy portfolio and ensuring it aligns with your financial goals. Most financial advisors would normally suggest a review occur at least once - every 12 months. Here are three steps to get you started:
Step 1: Review Your Investment Objectives and Risk Tolerance
First of all, revisiting your investment objectives and risk tolerance is fundamental. Start by clearly defining your financial goals. Are you investing for one or more of the following: retirement, purchasing a house, or saving for your children's education? Assess if these goals have changed or evolved since your last evaluation.
Next, reassess your risk tolerance. This determines how much market volatility (significant swings that can occur both up and down in the unrealized value of your investments) you can handle. Many investors would describe themselves as either Conservative, Moderate or Aggressive or some combination of these descriptions. Has your tolerance for risk changed due to life circ*mstances, your anticipation of retiring soon or market experiences? Understanding your risk appetite is essential for maintaining a properly diversified portfolio that aligns with your comfort level.
Important Note: Many investors could benefit from a written Investment Policy Statement to help keep them on-track to reaching their goals and to help keep them from making purely emotional decisions when things get bumpy! The following link from Morningstar provides some additional information on this type of useful tool: https://www.morningstar.com/personal-finance/how-create-an-investment-policy-statement
Step 2: Analyze Portfolio Performance
Evaluate the performance of your investments against benchmarks and your own expectations. Here's how:
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Step 3: Rebalance and Adjust
Based on your evaluation, take necessary actions to realign your portfolio:
Conclusion
Periodically evaluating your investments helps ensure that your portfolio stays in line with your financial objectives and risk tolerance. By reviewing your goals, analyzing performance, and making necessary adjustments, you can maintain a healthy investment portfolio that better positions you to achieve your long-term financial aspirations.
How can my firm help you take the first step toward a better financial future?
Whether you are:
> Considering adding an additional or complementary advisor
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Give me a call or send me a text to (704) 589-0941 to schedule a 15 minute “Get Acquainted Call” so I can learn a little about your situation, goals and needs. At the end of that call; we should have a good idea if we can assist you in the areas you desire and discuss appropriate next steps.