When investing, you should never skip taking a close look at your portfolio at least once a year. If you see anything that could use some fine-tuning, it just means you can still get your portfolio in better shape.
Think of this as tweaking your workout program. If you’re no longer seeing progress, it means your body has gotten used to your routine. If you’re not seeing the results you want or if your goal has changed, you’ll have to make changes. If you’re thinking of getting your portfolio in shape not just for summer, but perhaps for the rest of the year, following these steps may help you finally get things done.
Look at your entire situation
The first step is to compare your current standing versus when you first started investing. What has changed? Has your income gone up? How about your savings and investment rate? Are you now paying for a loan or an installment? Are you more comfortable taking risks?
If you don’t tweak periodically, you could, for example, receive an increase in your salary and end up spending more instead of also changing your saving and investing habits. This isn’t a good way to do it. These checkpoints are there to make sure your income, your saving and investing rate, and your overall lifestyle are in tune with each other.
Changes to these and other factors can have a big impact on your investment strategy, so you really should be paying attention to them. Remember to base your portfolio on your current finances and mindset, aside from your goals.
Look at your portfolio
Next, check the investment outlets you have. See which ones no longer serve their purpose, either because of their poor performance, or because they no longer match your investor personality, time horizon and long-term goals.
It wouldn’t be a bad idea to keep investments that may still fulfill your goals, even if their performance is just acceptable. This needs a deeper understanding of your investment options. Ideally, you should be making informed decisions right from the get-go. On the other hand, you may see some investments delivering solid performance and having strong potential to grow and fulfill your goals. If you do, it might be good to put more money in them.
Look at what you can add
You don’t always have to look for a superstar addition to your roster for that championship run. Sometimes, simply adding a role player makes a big difference. Periodic calibration also requires checking if there are any missing pieces. Specifically, if there are any investments that you could still add to the mix make your portfolio even better. This could be for different purposes: better liquidity, improved cash flow, regular income stream (from coupons or dividends), diversification through asset-class variety, and risk management.
If you see an investment product with a lot of potential and it fits your investing budget, getting it is another good way to help your portfolio be in better shape. If your income has gone up, your goal has changed or your risk profile is now different, you should probably add new investments that match these changes.
Keep it going
Check your portfolio at least once a year to see if everything is performing well. While this doesn’t mean that you need to make changes annually, you shouldn’t be afraid of changing things up if you have to.
While it probably won’t happen, you shouldn’t be afraid of redoing your entire portfolio if needed. This will require a bit more effort to research, plan and get new investment products, but it will still be better than having assets that do not match your needs.
Andoy Beltran is a stock broker and entrepreneur. He heads Business Development and Market Education for First Metro Securities. Andoy is a self-professed "soldier of love," who believes that "Your money will not invest itself. Do it."