Review Your Investment Goals
Too many investors don’t think about what their money will be used for, and what they will need to accomplish their goals. According to the Employee Benefits Research Institute, less than half of workers have performed a retirement needs assessment. Other investment needs, including income, college, and other goals, probably haven’t been assessed by many people, either.
Review your investment goals, and remind yourself of your investment plan. As you move through your investing checkup, evaluate your progress in light of how your efforts will impact your ability to reach your goals.
Take a look at the investments used in your mutual funds. Do you have several shares of the same company across multiple mutual funds? In some cases, your lack of diversity might have more to do with becoming heavy in a particular sector. You might also notice that you don’t have as much diversity as you would like in terms of geography. Are you heavy on stocks from South America, but missing exposure to Europe?
Your desired portfolio diversity will depend on your goals. If you are in the growth phase of your portfolio, the types of assets you include will be different from the diversity required when you are using your portfolio for income. Make sure that your portfolio’s diversity matches with your current risk tolerance, and that it matches up with your goals for the future. If you need to make changes, you can sell shares of certain mutual funds and other assets and replace them with investments that better meet your needs.
Investment Fees Review
Review the fees you are paying. How do your mutual fund, ETF, and plan administration fees compare to what you have access to? Are you paying high transaction fees? Do the returns you receive justify the fees you are paying to money managers? Run a comparison, and determine whether or not it makes sense to move your money into vehicles that allow you to keep more of your money.
Tax Harvesting Losers
You can sell losing investments to offset capital gains received from selling appreciating investments. Once that is done, you can use up to $3,000 in capital losses to offset other income. Additionally, you can carry forward any remain excess to another year. Keeping good records is essential when you want to harvest your losses.