How to Spring Clean Your Portfolio

Spring is a good time to evaluate and rebalance your investments.


Spring is a time to clean and renew. Here in the Midwest we open windows, clean the house, and get the yard in shape. This is also a great time to clean and renew your finances. Here are some ways to spiff up your investment portfolio this spring:

Review your asset allocation plan. Do this before reviewing your individual investments so you aren't influenced by your current allocation. Your risk tolerance may have changed, so some changes to your allocation may be needed. Or you may realize you need to revise your asset allocation to reach your financial goals. This step should be done in conjunction with a review of your overall financial plan. The financial plan should drive your investing activities, your allocation, and your choice of investments.

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Find your most recent statements. List each investment and its current value. Total your investments by category—cash, bonds, and stocks—and asset class—large cap-stocks, international stocks, intermediate-term bonds. Then compare those percentages to your asset allocation plan. If you haven't done this review in a while, you might find that your current allocation is off. This is especially true given the significant rally in the stock market since March 2009.

Review your current investment holdings. Have your stocks hit their sell targets? How do your mutual funds compare to their peers? It is important to establish a monitoring process for your individual holdings, and to review your holdings against appropriate benchmarks on a regular basis. If needed, make changes to your holdings if they no longer fit.

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Rebalance. You may need to buy and sell holdings, or perhaps you can allocate new investment dollars to do this. Once you have determined that this is needed, you should get your allocation back in line as soon as possible to ensure that your allocation is consistent with the risk and return targets in your financial plan.

Consolidate accounts where possible. It's not unusual to find you have a number of accounts with a variety of holdings. In this day and age, it is common for people to have several old retirement accounts from prior employers, a few IRAs, and other accounts. Do you own similar stocks or other investments that aren't adding much diversification? While you want to be properly diversified, minimizing the number of accounts and investments makes it easier to monitor your portfolio. Monitoring these accounts and holdings can be a daunting task and therefore many investors just don't. Consolidate old accounts to reduce your financial clutter.

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Just as spring is a time to clean up around the house and the yard, it is also a great time to spruce up and review your finances. With tax filing just behind us and your records hopefully still close at hand, review and revamp your portfolio if needed.

Roger Wohlner, CFP® is a fee-only financial adviser at Asset Strategy Consultants where he provides advice to individual clients, retirement plan sponsors, foundations, and endowments. He recently cofounded Retirement Fiduciary Advisors to provide direct investment and retirement planning advice to 401(k) plan participants. Follow Roger on Twitter and LinkedIn.