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Now that we are well into May, you might
look around your house and yard and
decide it's time for a little spring
cleaning, if you're the sort of person
who does that kind of thing. But even if
you are not, you can probably benefit
from sprucing up another part of your
life, your investment portfolio. Why?
Because things change in your life. And
while your investment and insurance
products and strategies may have been
appropriate for you at one time, that
may no longer be the case.
Once you decide to clean up
your portfolio, what should you look
for? Here are a few ideas to consider.
Avoid redundant holdings.
Do you have too many of the same
type of stocks cluttering your
portfolio? Too many people think that,
when it comes to investing, there is no
such thing as too much of a good thing.
Consequently, if they have two growth
stocks from the same industry, they add
a third. Or, on the other side of the
investment spectrum, if they like the
steady income from their fixed income
they might buy another. Depending on
your individual needs, you may find that
growth stocks and fixed income can play
a role in your diversified portfolio,
but overloading on either of these
securities, or any other for that matte,
can actually hinder your progress toward
your financial goals. For example, if
you add too many of the same type of
growth stocks, you may expose yourself
to a market downturn that is
particularly hard on one specific
sector. Or if you divert some of your
investment dollars toward additional
fixed income, you may deprive yourself
of needed growth opportunities.
Examine automatic
investments. Are you still
automatically moving money from your
checking account into an investment that
you first purchased years ago, under
different circumstances? Could this
money possibly be better directed
elsewhere? Check your automatic
purchases carefully to see if they still
meet your needs.
Review your insurance
coverage. When you first start out
in your career and have a young family,
you definitely need a certain amount of
life insurance to replace your income,
pay for your mortgage, educate your
children, etc. But, as your children
grow and leave home, and you finish
paying for your home, your needs for
life insurance will change. Go over your
policies with your investment
professional to see if your coverage is
still appropriate. You may find that a
different type of policy can be
beneficial in helping you meet other
types of needs, such as estate planning.
Check your beneficiaries.
Over the years, your family situation
may change To cite just one possibility,
you may remarry and take on the
responsibilities of a blended family. If
this happens, you need to closely check
the beneficiary designations on your
investments, retirement plans and
insurance policies. If you do not update
these designations, your wishes may not
be carried out when your estate is
settled.
By following these
suggestions, you can give your portfolio
a spring cleaning that should serve you
well in all seasons. |
