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Top 5 Steps to Spring Clean Your Investment Portfolio


Spring has officially arrived and that means that it’s time to start cleaning out the clutter and organizing the inside of your home. Doing the same thing with your finances is probably a good idea. If it’s been a while since you took a look at how your stocks, bonds and other assets are performing, here are five ways to begin spring cleaning your investment portfolio.

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1. Streamline Your Accounts

Juggling several different investment accounts is not only time-consuming but it can also cost you if you can’t keep track of how all of your assets are performing. Consolidating your accounts can make it easier to manage your investments and it’s not difficult to do.

Rolling over old 401(k)s into a single IRA, for example, is often just a matter of opening an account and filling out some forms. If you’ve got several taxable accounts set up through different brokerages, whittling them down means that you’ll have all of your money in one place. Plus, it might cut down on the fees you’re paying in the process.

2. Check Your Asset Allocation

Spring Clean Your Investment Portfolio In 5 Simple Steps

Managing your asset allocation is all about balancing risk against reward. If you’ve been neglecting your portfolio for a few months or even years, your investments might not align with your current goals. Without even realizing it, you could be shortchanging your returns or taking on more risk than you really need.

When you’re spring cleaning your portfolio, it’s a good idea to take a close look at how it’s divided up between stocks, bonds and cash investments. If you find that your investments are skewed in the wrong direction, rebalancing can help you get back on track.

Try out our asset allocation calculator.

3. Let Go of Losers

Some investments, no matter how long you hold on to them, just aren’t going to pan out and at some point you’ll have to cut your losses. If you’ve got money tied up in a stock or a mutual fund that consistently underperforms, it may be time to face the music and sell it off. While it may sting a little, reinvesting the proceeds of the sale in a winner could benefit your portfolio in the long run.

4. Review What You’re Paying in Fees

Spring Clean Your Investment Portfolio In 5 Simple Steps

Fees can be big portfolio killers and being oblivious to what your investments cost isn’t something you can afford to do. As you’re rebalancing, it’s important to pay attention to how the fees add up. Even if a particular investment is performing well and generating consistent returns, its fees might be diminishing your bottom line. Consider trading out expensive assets, like actively managed funds, for exchange-traded funds which tend to have fewer fees and are more tax-efficient.

Related Article: What Are Exchange-Traded Funds (ETFs)?

5. Inject Diversity Where Needed

Diversification is an important part of any investing strategy because it allows you to spread out your risk. If stocks make up a large percentage of your investments, you could be in for a rude awakening if the market tanks.

As you’re reshaping your portfolio for the rest of the year, it’s best to try to fill it with different asset classes. For example, if you don’t have any real estate holdings, you could buy shares in a REIT. Diversifying your portfolio can help insulate you from market volatility.

The Bottom Line

As the weather gets warmer, tending to your investments may be the last thing on your mind. But you probably won’t regret spending a few hours inside getting your portfolio in order. Getting organized, trimming unnecessary fees and eliminating investments that aren’t paying off can put you on the right course for the rest of the year.

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