Reviewing your current financial condition is an essential part of financial planning, and that includes reviewing your assets.
Even though there are many components to financial planning, you should also asses your portfolio on an ongoing basis. Checking how your investments are going is key to reaching your financial goals.
Since the market fluctuates, there is no guarantee that your initial investment strategies will be successful, especially if your plan is long term.
Reviewing your assets regularly and monitoring your investments is the best way to deal with today’s volatile market. How often you choose to do this may be up to you or maybe by recommendations of your financial planner.
However, you should complete this process at least once per year. This will allow you to make any adjustments and changes accordingly. Learn more about evaluating your assets and tips on managing your portfolio, read the complete article below.
Learn About Managing Debt
Resources that you are using to settle your debt could be otherwise used to invest and grow your portfolio. Therefore, it is beneficial if you focus on settling any outstanding debt before investing. To begin, you can list all of your debts by higher to lower balance, or by highest to lowest interest rates.
You will pay off your debt quickly, and you will also have a better idea of how much money you owe. It is up to you which debts to pay first.
You may choose to pay smaller loans first and so on up the list as an encouragement to pay off your debts.
Another option is to transfer your outstanding debt to a single source or creditor. This is a great alternative to pay what you owe at a lower interest rate and to a single creditor.
On the other hand, depending on your debts, it may be more useful to pay the highest source of debt or the one with the highest interest rates.
You may be able to renegotiate interest rates with your lender to lower your debts more rapidly. It is important that you take the time to review your debts to manage them accordingly.
Other options, such as debt forgiveness programs may be a good alternative for you to settle your debt. For instance, some federal grants exist to help qualifying applicants to pay off their debts.
Federal, state and local government workers are generally eligible to apply for these government funds. You can look into other options available such as this one and see if you meet the requirements of a particular special aid program.
Learn About Managing Portfolio Fees
You can allocate more of your income towards your portfolio by improving its money performance. You may use a significant portion of your money to pay for portfolio fees that you could avoid paying.
There are two main types of fees associated with your portfolio management. These are ongoing fees and transactions costs.
You pay for costs associated with your transactions, like buying or selling stocks. You should opt to utilize services provided by investment firms with lower transaction costs if you are a frequent trader.
This way, you can trade as much as you do without having much of your returns destined towards covering expensive transaction fees. Instead, you can use those savings to invest in your portfolio or add to your savings fund.
On the other hand, you must pay ongoing fees as part of the cost of having a portfolio. These fees cover your investments operating expenses, and you may be paying them on an annual basis depending on your portfolio.
You should be aware of how much you are currently paying and try to negotiate these costs if you consider that you are overpaying for your portfolio services. You can also move your investments to another firm, but you may have to incur tax fees for this transaction.
Finally, check for the current price of your stocks to verify that you do not sell them at a loss when you change holding companies.
Learn About the Importance of Diversifying
One effective way to manage the risk of your portfolio and your investments are to diversify.
To achieve portfolio diversification, you must spread your money across a variety of investments rather than investing all your capital in a single investment.
Diversifying will help you avoid the consequences that a sudden economic downturn might have on your investments.
You will be able to formulate a diversification plan depending on your age, financial goals, and tolerance for risk.
How you diversify your investments depends on you, but your age is a good indicator of how you should manage your portfolio. An effective method to learn where to start is to subtract your age to 110.
The remainder will refer to the percentage that you should invest in stocks or high-risk assets. You should allocate the remaining percentage to safer investments such as bonds or treasury bills.
These options have fewer returns but are also less volatile or sensitive to market imperfections. Furthermore, you will have a bigger percentage of your portfolio in low-risk assets as you age.
By doing so, your investments will be safer the closer you get to retirement.
How to Check Your Portfolio Performance
Benchmarking can help you determine how your investments are performing to other successful portfolios. You should choose a group of representative stocks in the market that are comparable to yours. Your benchmark should be a good match of your mix of stocks if you have a diversified portfolio.
The performance of your asset mix should be as good or better than the benchmark of your choice. In case your portfolio is performing well below the average, you should consider making adjustments necessary to improve your investments.
You can see a good example of performance assessment by referring to the Dow Jones industrial average or the S&P 500, which tracks the 500 largest U.S. companies. By reviewing these market comparisons, you will understand how the assessment process works.
About Income Potential During Your Retirement
The goal of your financial plan may aim towards your retirement fund.
At this point, you should make sure that your funds a readily available in the future for your use. Therefore, it is important that you plan how often you will need funds during your retirement years. Make sure to have funds for at least 12 months that you could have access to.
For this, you can deposit the amount you will need in a separate savings account. You should have quick access to this account without having to pay extra fees for withdrawing your money.