Step Three: Make Your Portfolio Align with Your Strategy
Once you know what you own, it's time to find out whether your current portfolio fits the strategy you created. (Remember, this strategy could be one of the strategies offered in Scottrade Portfolio Review Tool's
To start, check your portfolio's asset allocation. If that doesn't match the asset allocation laid out in your strategy, you may want to shift investments to tailor your portfolio's mix.
Next, consider weeding out redundant investments. If your current portfolio already has three large-cap growth funds, for example, that might cause over concentration. The Portfolio Review Tool can analyze whether your portfolio might be over concentrated or under concentrated and help get you back in balance. The tool considers your portfolio's diversification, and provides valuable information on performance, price, fundamentals, risk, expenses and other factors to help you determine the relative strengths and weaknesses of your investments. This can help you decide which investments you may want to buy to fill out your asset allocation strategy and which ones you may want to sell.
Finally, you can rebalance your existing positions, add outside accounts or add cash to purchase new investments to help fill any portfolio holes. When you're ready for this step, you can use Morningstar's Investment Finder to search for stocks, ETFs and mutual funds that can help you fill out your Target Model or allocation strategy.
Read Next: Schedule a Time to Rebalance
The Target Allocation Models are designed to follow certain investment objectives, although there is no guarantee that these objectives will be met.