Planning your financial future successfully means making sure to do an ongoing review of your portfolio.

Stay up to date – always balance your financial situation with the current circumstances of your life.

One of the most important parts of making sure that you are on the way to wealth is to constantly make a financial review of your investments. If you don’t re-evaluate and adjust your portfolio on a regular basis, the market may do the job for you – in a way you wouldn’t choose. If your portfolio is top-heavy with the current popular stocks and the market moves dramatically downward, your net worth will take a big dive. Don’t be over-exposed in one field or in one investment mode. Consider a variety of investment opportuniMusic(97713)Credit: xedos4 / FreeDigitalPhotos.netties.

Easier Said Than Done

When the market’s movements shift your asset allocation off center, one remedy you may wish to consider is to sell shares in the over-weighted class and invest the money in some of the under-represented areas. This may be easier said than done. After all, it takes a strong believer to sell the best performers and invest in weaker players. Many investors, however, use this method to maintain portfolio balance.

Rebalancing your portfolio should be done either on a given time schedule (i.e., quarterly or annually) or when your portfolio changes by a certain percentage. Pick a spread you’re comfortable with (depending on your risk tolerance) and re-evaluate when your portfolio is off by that amount.

Keep in mind that if you sell your profitable stocks, capital gains taxes will take a significant bite out of your earnings. Nevertheless, any “lost” profit due to taxes might still make this a dollar-wise move, as it addresses the overall health of your portfolio.

Regular Reviews

Review your portfolio periodically. If your holdings are spread among several asset classes, a review once or twice a year should be sufficient. But, if you are an active trader or aren’t diversified, your portfolio may need attention more often.

Thinking about your financial decisionsCredit: Image: Andy Newson /

When you review your portfolio, don’t just look at your stock/bond ratio. Make sure that your holdings are truly balanced. Your stocks, bonds, and mutual funds might be gravitating towards the same or similar sectors. If so, this allocation might need some altering. Also, check within each asset class to make sure that the holdings are balanced within each subcategory. Are your stocks weighted between small and large cap?  Growth and value?  Check that all your mutual funds remain diversified since a fund’s holdings change over time.

A watched pot may not boil, but a carefully watched portfolio is the first step to getting on track with your investment goals.

For more tips on how to run your finances successfully, read: Six Ways to Prevent Your Fiscal Situation From Becoming a Financial Problem.


Disclaimer: This article is for educational purposes and is not a substitute for investment advice that takes into account each individual’s special position and needs. Past performance is no guarantee of future returns.