How To Clean Up Your Investment Portfolio

Our homes and work spaces aren’t the only places in our lives that need regular tidying up. We know that our homes and desktops need deep cleaning and organization a few times a year — and so does our investment portfolio. 

However, if you’ve ever had to clean out a pantry or go back through months of pdfs on your hard drive, you know how overwhelming this can become. There are a few key things to consider when cleaning up your investment portfolio. Here, you’ll find the to-do list for an investment deep clean to be sure that things are optimized and performing well. 

Review your goals and risk tolerance.

The best place to start your portfolio cleaning is with yourself. Consider your financial situation. Have things changed? Perhaps you have a new job or received a raise you haven’t been investing yet. Maybe you’ve had kids but haven’t considered their future education. Many of these significant life changes can alter our goals, timelines, and the level of risk we’re willing to take with our investments. Understanding your long-term goals can help you decide if you’re on the right track or if some significant changes are necessary. 

Balance and rebalance your portfolio.

Once you know your current risk tolerance and how you feel about your progress, you can rebalance your portfolio accordingly. As markets shift, we must rebalance at least once a year. You may need to consider the percentage of your portfolio represented in stocks vs. fixed equity markets. There’s been a lot of market volatility and change in the past two years, and rebalancing more regularly is critical to account for your risk tolerance and investment goals. 

Explore new investment opportunities.

When we rebalance our portfolio, we may decide to subtract some old investments and look for new opportunities. Consider the overall trends in the global economy and look for investment opportunities. For example, are electric vehicles and solar energy becoming more popular? How is real estate performing, and what impact do interest rates have? Answering these questions can help you define new alternative assets or markets that could be primed for success in the future.

Organize files and statements.

Organizing files and statements are where we get into the “cleaning” aspect of cleaning an investment portfolio. Maybe you have a paper system that has become a little unruly, or you need to find a better way to organize and file digital records. No matter how you manage your portfolio and investment statements, review your system and ensure everything is in the right place and accounted for. 

Streamline and consolidate.

As you move closer to retirement or a large purchase, it’s essential to streamline your portfolio. If you have multiple investment accounts and are nearing retirement, consider finding ways to merge similarly taxed accounts and commit to one or two institutions. Consolidation will help you in the future with paperwork, filing taxes, and managing your investments. When juggling too many things, mistakes are easily made. Be sure to simplify where possible and keep clear and precise records. 

Can you further diversify?

Diversification is vital when reducing risk and increasing the potential return of your investments. You may think, “But you just said consolidate and simplify.” Yes, we did, but it’s also important to diversify to protect yourself. Instead of having fifteen different real estate investments and managing twenty or more individual stocks, consider following three or four companies and investing in ETFs for the remainder. Then, look for one or two real estate investment types with the best potential for returns. Mortgage pools are a great way to streamline your process while still diversifying your investment capital into numerous projects and staying organized, thanks to the MIC running the fund. 
Curious about mortgage pools and if they’re the right addition to your portfolio? Jordan on our team is here to answer your specific questions. Get in touch today and start cleaning your portfolio before it gets too unruly.