Mid-Year Portfolio Review: Are You Staying on Track?

Right now, you may be making your summer travel plans and getting ready to enjoy the warm weather. But have you reviewed your portfolio lately? If not, a mid-year checkup might be what a financial doctor would order.

“The halfway point of the year is an excellent opportunity to reassess your portfolio,” said Joe Correnti, senior vice president of brokerage product at Scottrade. “Periodically checking to see if your portfolio aligns with your goals is an important aspect of healthy financial planning.”

Here are some aspects of your portfolio you may want to check up on at the halfway point of the year:

  • Changes to your financial goals:  Has something happened in your life that calls for a fundamental change to your financial plan? Maybe a change in circumstances has changed your time horizon or the amount of risk you’re willing to handle. If so, it’s important to take a hard look at your portfolio to determine whether it aligns with your revised financial goals.
  • Asset allocation: An important part of investment planning is setting an asset allocation that you feel comfortable with. Asset allocation refers to how you divvy up your investments among broad asset classes like stocks, bonds and cash. An example of one person’s ideal allocation would be 70% stocks, 25% bonds and 5% cash. Although your portfolio may have been in line with your desired asset allocation at the beginning of the year, depending on the performance of your portfolio, your asset allocation may have changed over the past 6 months. If your actual allocations are outside of your targets, then perhaps it’s time to readjust your portfolio to get it back in line with your original targets.
  • Diversification: Along with a portfolio with a proper asset class balance, you will want to ensure that you’re properly diversified inside each asset class. Let’s say that you want 60% of your portfolio in stocks. If you’re heavily concentrated in a few stocks, you could be taking on more risk than you should in the stock portion of your portfolio. That risk grows if one of the stocks outperforms the others and becomes a larger portion of your portfolio than you planned.
  • Performance: Are there certain aspects of your portfolio that are holding you down? You may want to consider selling to help offset capital gains you might take throughout the year. Tax loss harvesting is something you can plan for throughout the year.

“At the end of the day, your portfolio may be in good health and no changes may be necessary,” Correnti said. “But you won’t know that without a periodic review of your portfolio’s vital signs.”

What are some key aspects of your portfolio that you plan to look at during the halfway mark?

Read Next: “How to Automate Your Investing Plan.”

Scottrade® clients can log in and use the Portfolio Review Tool.  

Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market.

The material provided in this article is for informational purposes only and its use does not guarantee a profit. None of the information provided should be considered a recommendation or solicitation to invest in, or liquidate, a particular security or type of security, or to pursue a specific strategy. Investors should fully research any security or strategy before making an investment decision.

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