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Investing: 7 Steps to Spring Clean Your Portfolio

Some beautiful flowers in the sun.

Spring time is traditionally the time to clean the garage and to get the yard in shape.  It’s also a great time to clean up your investment portfolio.  Here are 7 steps to a cleaner, more efficient portfolio.

Think of your investments as a portfolio

This is the first key step.  Many investors focus on each holding and fail to look at the sum of the parts.  Nobody is saying that investing in quality mutual fundsETFs, stocks, etc. is not important.  Start with your overall portfolio and determine if you are properly allocated in line with your financial goals and risk tolerance.  Ideally this would all be an extension of your financial plan.  Even younger investors starting out should think in terms of their overall portfolio, even if this is only a few holdings at this point. 

Find your most recent statements and organize your records 

Make sure that you receive and review statements from ALL investment accounts every time one is issued.  This might be monthly or quarterly depending upon your custodian and the type of account.  Keep them all in a file (paper and/or electronic) and more importantly find a way to take a consolidated, overall view of your holdings as a portfolio.  I enter all client accounts and holdings into a spreadsheet. I suggest categorizing your portfolio by account and by asset class (large cap, small cap, etc.).  At a minimum, this will show you how well you are diversified across different asset classes.  You might also be amazed at the number of individual holdings across all of these accounts, I call this financial clutter.  This is common among folks who might have a number of old 401(k) accounts at their former employers.  I had a client with almost 50 distinct holdings across multiple accounts when we started working together.  This is hard for anyone to track and monitor efficiently. 

Consolidate your accounts

To the extent possible, consolidate your accounts.  Unless there is a compelling reason to leave an old 401(k) with a former employer, monitoring your portfolio will be much easier if you roll these accounts into a consolidated IRA or even into your current employer’s 401(k) if allowed and the plan is a good one.  This also holds true if you have several IRA accounts with various custodians as well as for taxable accounts, annuities, etc.  

Review your asset allocation plan (or develop one)

This should happen before reviewing your individual investments so you aren’t influenced by your current allocation. As I’ve advocated here many times you need to have a financial plan in place before you decide upon an asset allocation strategy.  The financial plan should drive your investing activities, your allocation, and your choice of investments.  A well-constructed financial plan will help you focus on your risk-tolerance and your goals for the money you save and invest.

Review your current investment holdings

Have your stocks hit their sell targets? How do your mutual funds compare to their peers? It is important to establish a monitoring process for your individual holdings, and to review your holdings against appropriate benchmarks on a regular basis. If needed, make changes to your holdings if they no longer fit. 

Rebalance your portfolio 

You may need to buy and sell holdings or perhaps you can allocate new investment dollars to do this. Once you have determined that this is needed, you should get your allocation back in line as soon as possible to ensure that your allocation is consistent with the risk and return targets in your financial plan.  Remember your allocation should be reviewed across all of your various accounts.

Establish a regular process to review and monitor your portfolio 

Getting your portfolio in shape once does no good if you don’t establish a process to review your portfolio and your holdings on a regular basis.  This doesn’t mean looking at your investments daily or even weekly.  Depending upon your needs and your interest in doing this quarterly or semi-annually is sufficient for most.  At least annually this should be incorporated with a review of your financial plan to ensure that everything is in synch.

Please feel free to contact me with your financial planning and investing questions.  Check out our Financial Planning and Investment Advice for Individuals page to learn more about our services.  

For you do-it-yourselfers, check out Morningstar.com to analyze your investment holdings and your portfolio. Please click on the link to get a free trial for their premium services.  Please check out our Resources page for links to some additional tools and services that might be beneficial to you. 

Photo credit:  Wikipedia

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  1. Excellent book keeping and statements can go a long way in saving time, money and hassle down the road. This can be as simple as making taxes easier, assuring less mail to sort through (email too) and as relieving as studying one account of securities and investments.

    For me, spring and investments go together in that I look at the growth, trim some of the earnings and rebalance, just like my garden and yard.

  2. Excellent advice Roger. Now would be a good time for investors to consider more cash in their asset allocation plan.

  3. OK, quarterly or semi-annual review of investments I can handle 🙂

    Anything more than that I find short circuits my brain and overwhelms me. Especially since I review and reconcile my bank and credit card statements every month. That’s already enough to do once per month!

    • Roger Wohlner says

      Thanks for your comment Agatha. The key is getting started, once you have a good process in place it is relatively painless to review your portfolio on a regular basis.

  4. Spring cleaning your investmenet portfolio is a great idea. I have a tendancy to forget about the money (or at least what asset allocation it’s in). I love to check my balances, but I rarely check how they are doing compared to the market or other funds. Do you suggest a certain program to view all of your accounts at once? I currently have a spreadsheet (which is what you said you do), but I have to log in to 5-10 different websites in order to get my current balances everytime. It just gets a bit annoying.

  5. I like the idea of spring cleaning your finances. It is a good time to look at your allocation and rebalance. I think I’m stock heavy right now.

    • Roger Wohlner says

      Thanks for your comment Kim. Spring is in general a logical time to do this as most people are thinking in terms of their finances as they prepare their taxes. This year its not unusual to be a bit over allocated to stocks with the recent gains in the market over the past several quarters.

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