Spring Cleanout of Your Investment Portfolio

by Stacy Francis, CFP®, CDFA

I love this time of the year! Trees painted in that fresh, new green, baby birds chirping in the trees, and a sense of excitement in the air. I spent last Saturday preparing my closet for spring and summer: warm, heavy jackets making room for light summer coats, sweaters yielding for shorts and dresses, and boots replaced by cute sandals and heels. Of course, I also had the opportunity to donate the old items that no longer fit (size or fashion wise) to a lovely charity, and to pick up a few new ones – you know, the kind that gives your entire closet a facelift and makes every outfit feel brand new.

For those who haven’t yet gotten around to it, this is the time to clean out your investment portfolio as well. Schedule an appointment with your financial planner to discuss the following:

1. Is all or a portion of your capital invested in a fund, industry, market or company you no longer believe in? If so, it may be time to toss! The same applies if a fund has gone through a shift in management or style that you feel is for the worse. You can access this information in annual reports – or through google!

2. Monitor the Morningstar ratings for your funds, albeit not religiously. The score (one through five) will tell you how well a fund is doing compared to similar funds and relevant indexes – not how good of an investment it is overall. This is why it is crucial to do your own research as well. A two star-rated fund in an upcoming industry may be a better option than a four-rated one invested in a troubled sector. And with this in mind . . .

3. Have any new industries, companies, funds or markets sparked your interest lately? Have you done your research and feel fairly certain they’ll do well in the future? You may want to send some of your dollars in that direction!

4. Do you need to be more conservative, or could this be an opportunity for you to speculate a little? Your investment strategy should change not only with age (typically, the older you get, the more conservative it should be), but also with new market circumstances. If you are young and have plenty of time still, you may want to take advantage of this opportunity to pick up stocks and mutual funds invested in stocks for less.

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