Why and When You Should Make Changes to Your Portfolio

It is important to sit down from time to time and review your portfolio to make sure that your investment strategy and allocation still has you on track toward financial stability in the future. The following describes why it is important to review your portfolio, and when you should consider changes.

Why Make Changes?

There are many reasons to make changes to your portfolio. Some of those reasons are good, and some are bad. When you decide to make changes to your portfolio, make sure you are doing so for the right reasons. Some of the important factors to consider are the following:

• Changes in your financial needs/circumstances: If your financial goals change or major life events impact you, this is a reasonable time to look at your investments and asset allocations, and consider making changes.

• Changes in your risk tolerance: As you near retirement, for example, your tolerance for risk should be shrinking. As a result, you will want to make changes to your portfolio that reflect this change by moving funds away from high-risk accounts and into moderate-growth, safe funds.

• Are your investments underperforming? Consistent poor performances from your funds over the long-term, not just weeks or months, but several quarters or consecutive years, is cause to have a look at your portfolio and consider changes.

• Are your investments outperforming?: Although it is not necessary to fix something that is not broken, it is wise to look at investments that are outperforming the market and understand why. Your financial advisor can help you make this assessment and even help you dodge the temptation to cash out if there is still room for growth.

When Make Changes?

Now that you know reasons why, and why not, to make changes, it is time to consider when you should make those changes. An aggressive approach would be to meet with your financial advisor once a quarter and review all of your investments. This is perhaps best saved for the time period when you are nearing retirement so you ensure that your investments and assets are protected for the big day when you hang up your business attire for the last time.

In the meantime, US News Money notes that you are safe to meet with your financial advisor once a year to review your accounts. You will want to look for imbalances in your portfolio that can occur through underperformance of certain stocks/bonds/funds, and talk to your financial advisor about rebalancing your portfolio to stay on track for retirement. Contact Indian River Financial Group for more information.