With the arrival of spring, it’s time to tidy up your investment portfolio. Here are three financial spring cleaning tips you might want to consider.
Get rid of what you no longer need
When you clean your home thoroughly, you end up disposing of all kinds of things – some of which you may have even forgotten you own. The same principle might apply to some of your investments. Speak with your financial advisor to see if you still have some holdings that are no longer appropriate for you and are best removed from your portfolio.
Trim back your duplicates
If you went through your house carefully, you might be surprised at how many items serve the same purpose. For example, do you really need two toasters? There may be similar redundancies with your investment portfolio. For example, you may have two stocks issued by different companies that sell similar products. Instead, you might find it’s much better to exchange one of those for a different company in a different sector to boost your diversification. While diversification cannot guarantee a profit or protect against a loss, it may help reduce the effects of market volatility.
Put things back in order
Many of us tend to have messy closets and storage sheds because over time we’ve haphazardly tossed item after item into them. There may not be anything that has to be thrown out, but a good clean-up is needed to organize everything properly. Similarly, your portfolio may need a good spring shake-out. For instance, you could have too much of one investment and too little of another. This could mean you are taking on too much risk or, conversely, that your holdings have become too conservative to provide the growth you need. As a result, some important re-balancing could be required to get your relative weightings back in tidy order, especially in light of the market changes we have seen in recent months.
By working with your financial advisor for your portfolio’s spring cleaning, you can help make sure your investment holdings are up-to-date, appropriately suited to your needs and well-positioned to help you make progress toward your long-term financial goals.
Kevin Dorey is a Financial Advisor with Edward Jones. Based in Tantallon, Kevin specializes in helping individuals reach their serious, long-term investment goals. He can be reached via email or at (902) 826-7982. Edward Jones is a member of the Canadian Investor Protection Fund.