It’s a busy time of year with vacations, graduation parties, and other celebrations. When there’s a lot going on, it’s easy to put things off. However, the key to reaching your financial goals is to get started as soon as possible. Stop procrastinating and make time for a portfolio review.

Are You Due for a Portfolio Review?

If you’re one of those investors who waits to review their portfolio until the market hits a rough patch, you’re missing an opportunity to better navigate those rough patches. Regardless of the market’s performance, regularly reviewing your portfolio with your financial professional can be an excellent way to keep your investments on track. Midway through the year is a good time for a checkup.

Use the following questions to keep you on track.

1. Have you had any major life changes since your last portfolio review?

It’s important to keep your investment strategy aligned with your financial goals.

  • Have you had a job change?
  • Were you married or divorced?
  • Did you have a child or lose a loved one?

With major life changes, often financial priorities change, too. Make sure to let your financial advisor know of any major life changes so they can guide you accordingly.

With your financial goals in mind, review the market outlook for the remainder of the year. This will help you determine if your asset mix for each goal continues to meet your time frame, risk tolerance, and overall needs. Of course, no one knows exactly what the market will do in the future, but by looking at current conditions and projections for interest rates, inflation, and economic growth, you may be able to identify factors that could influence the markets, and your investments, in the months ahead. With this broader perspective, you can update your investment strategy as needed.

Remember, even if you’ve chosen an appropriate asset allocation strategy for various goals, market forces may have altered your mix without any action on your part. For example, your asset allocation preference may be 60% stocks and 40% bonds, but now due to investment returns your portfolio is 75% stocks and 25% bonds. To return your asset mix back to its original allocation, you may want to rebalance your investments. You can do this by selling investments in the overrepresented asset classes and transferring the proceeds to the underrepresented asset classes, or simply by directing new contributions into asset classes that have been outpaced by others until the target allocation is reached.

2. How have your investments performed so far this year?

Review a summary of your portfolio’s total return and compare the performance of each asset class against a relevant benchmark. For example, with stocks you might compare performance against the S&P 500 (for domestic large caps), the Russell 2000 (for small caps), or the Global Dow (for global stocks). For mutual funds, you might use the Lipper indexes to see how your funds performed against a relevant benchmark. Consider any possible causes of over- or underperformance in each asset class. If any result was concentrated in a single asset class or investment, determine whether that performance was consistent with the asset’s typical behavior over time? If not, does it make sense to make some adjustments or leave things the same?

When you take the time to review the performance of your investments, you allow for the possibility of greater success in the months to come.

3. How tax-efficient is your portfolio?

If you’re not careful, taxes can have a big impact on your overall investment returns. You can’t control the markets, but you can control the accounts you use to save and invest. You also have control over what assets you hold in those accounts and the timing of when you sell your investments. Dividing assets strategically among taxable, tax-deferred, and tax-exempt accounts may help reduce the effect of taxes on your overall portfolio.

By taking the time to periodically review your portfolio in good economic times as well as bad, you can feel confident knowing that your investing strategy is attuned to current market conditions and your overall needs.

4. Do you have the right level of protection in place?

As you review your overall strategy, don’t forget to evaluate your insurance needs at least once a year. For many of my clients, I do this during open enrollment when employer insurance opportunities for the following year become available. For medical insurance, consider the following:

  • Deductible (the total amount you will have to pay before your insurance provider begins to pay)
  • Copays (a fixed amount you pay for health care visits)
  • Coinsurance (a percentage amount you pay for health care visits)
  • Premium (how much you pay each month)
  • Total Yearly Out-of-Pocket (the total amount you would be responsible for if you dealt with major medical issues throughout the year)

It’s easy to get caught up in the cost of the monthly premium and forget about the expenses that come with needing medical attention. Consider your savings plan and do your best to have at least enough money set aside to cover the deductible in the case of an emergency.

For life insurance, consider a policy outside of what your employer offers. Group coverage is great but it’s usually not enough and is costly to take it with you if you end up leaving your job.

What happens if you are disabled and unable to work for an extended period of time? Do you have enough savings in place to protect you? If not, you’ll want to have an appropriate level of short and long-term disability insurance in place.

Remember, your insurance needs change as you have changes in your life. Consider the right level of protection as you review your financial plan each year to make sure you have adequate coverage.

5. Are your estate plans up-to-date?

If you have estate documents, review them at least once a year to make sure they are up-to-date. If you don’t have estate plans in place, sit down with an attorney and get the basics taken care of. These may include:

  • Last Will and Testament
  • Revocable Living Trust
  • Advance Medical Directive
  • Living Will
  • Durable Power of Attorney
  • Health Care Power of Attorney
  • Beneficiary Designations

Additionally, a yearly review is a great time to make sure you have all of your documents updated and in order.

Your Portfolio Review Made Easy

The easiest way to review your portfolio is to contact an expert. If you need assistance reviewing your portfolio and making sure it’s aligned with your financial goals, contact us. While we are located in Ohio, we work with clients virtually all over the United States and look forward to assisting you.

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