Do you know if your investments are on track to support you throughout retirement? Regularly assessing your investment portfolio is essential to staying aligned with your long-term goals. Pure’s Financial Advisor, Robert Lucente, CFP®, outlines a simple four-step process to ensure your investment plan stays in sync with your financial goals.
Transcript
Whether you’re a seasoned investor or just starting out, assessing your investment portfolio is a key part of staying on track toward your financial goals. Here’s a simple 4-step process to help you do just that.
Step 1: Revisit your Investment Plan
Plan for your future, start by revisiting your investment plan. Are your goals still the same? Has your financial situation, time horizon, or risk tolerance changed?
Whether you’re saving for retirement, building wealth, or generating income—your investments should reflect your plan. If you’re still in the accumulation phase, think about where new contributions can go. If you’re drawing income, consider how much you’ll need to withdraw and from which investments you’ll take them from.
Set a regular check-in—once a year at least, or after major market changes.
Step 2: Evaluate Your Asset Mix
Next, assess your asset allocation—the mix of stocks, bonds, cash, and other investments.
Over time, market shifts can throw your mix off balance. For example, if stocks have outperformed, you may now be taking on more risk than you’re comfortable with. Or, if you’re underexposed to growth assets, you might fall short of your goals.
Also, check for diversification across categories:
Stocks: across sizes (small, mid, large), styles (growth vs. value), sectors, and geography.
Bonds: by sector, maturity, credit quality, and region.
If your asset classes have drifted 10% or more from their target, it may be time to rebalance—either by adjusting new contributions or selling and reallocating.
Step 3: Review Your Holdings
Dig into the individual investments you own. For stocks, evaluate performance, fundamentals, and valuation. For bonds, review credit ratings and duration.
For mutual funds and ETFs, compare returns and risks to appropriate benchmarks, and check for changes in management, strategy, or fees.
Also, check for over concentration. If any single investment—or employer stock—makes more than 5% of your portfolio, consider trimming it to reduce risk.
Step 4: Assess Performance
Finally, assess your portfolio’s overall performance. Ask yourself: Are you on pace to meet your long-term goals? Are your returns in line with relevant benchmarks like the S&P 500, MSCI World, or the US Aggregate Bond Index?
Don’t focus too much on short-term swings. Instead, watch for consistent underperformance or volatility that doesn’t match your risk tolerance.
If needed, revise your strategy but always stay focused on the big picture.
In closing, rebalancing isn’t just about moving money around—it’s about making sure your investment plan stays aligned with your life. So, take the time to plan, review, and adjust. Your future self will thank you. If you would like to see if your portfolio is properly balanced to reach you retirement goals, contact Pure for a free financial assessment.
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IMPORTANT DISCLOSURES:
• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor.
• Pure Financial Advisors LLC does not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations.
• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.
• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
CFP® – The CERTIFIED FINANCIAL PLANNER® certification is by the CFP Board of Standards, Inc. To attain the right to use the CFP® mark, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. 30 hours of continuing education is required every 2 years to maintain the certification.
