How Often Should You Review Your Portfolio?
As investors, it's easy to set and forget our investment portfolios, especially when things are looking and feeling stable. However, the truth is that regularly reviewing your investment portfolio is essential for maintaining financial health and making sure you’re prepared for any turbulence life throws your way. In this post, we'll explore exactly why you should review your portfolio frequently and highlight a couple of instances when doing so is particularly important.
Why Regular Portfolio Reviews Matter
Regular portfolio reviews serve several important purposes. Ramon Aguirre, our Financial Advisor and Fiduciary at DTN Wealth, lists these three points as the biggest reasons why portfolio reviews matter:
Stay Aligned with Financial Goals: You might approach wealth management with certain financial goals in mind and a certain risk tolerance, but those factors will always evolve over time. Your investment portfolio should reflect these changes, and regular reviews ensure that your portfolio remains aligned with your current objectives and risk tolerance. With those changes in mind, you can make whatever adjustments to your portfolio necessary to achieve your ambitions.
Monitor Performance and Diversification: Market conditions can always fluctuate and impact your current investment portfolio. Regular reviews allow you to monitor the performance of your investments and ensure that your portfolio stays at the risk tolerance you’re comfortable with.
Identify Opportunities and Risks: Financial markets are dynamic, creating both opportunities and risks for investors. Regular portfolio reviews help you stay informed about the newest market trends and economic developments that may impact your investments. By staying vigilant and proactive, you can capitalize on opportunities and mitigate potential risks before that volatility negatively impacts your portfolio.
Instances When Reviewing Your Portfolio is Important
Life Events
Significant life events like marriage, the birth of a child, or a career change may warrant a review of your investment portfolio. These events can impact your financial circumstances since most of them either cost or bring in a lot of money, and those changes can affect your financial goals and risk tolerance. For example, if your new career comes with more income, you might want to adjust the timeline for when you can take that expensive vacation or buy that dream house. Whatever the circumstances, major life events almost always necessitate adjustments to your investment strategy and portfolio.
Market Volatility
Periods of market volatility or economic uncertainty are the most important times to start reviewing your investment portfolio. During these periods, asset prices and market conditions can change unpredictably. However, by reviewing your portfolio regularly and reassessing your investment strategy to account for the current market conditions, you can make informed decisions to protect your investments and capitalize on new opportunities.
Regular portfolio reviews are essential for maintaining financial health and adapting to changing market conditions. By staying aligned with your financial goals, monitoring performance and diversification, and identifying opportunities and risks, you can ensure that your investment portfolio remains well-positioned to achieve long-term success.
Schedule a consultation with Ramon Aguirre of DTN Wealth today to review your portfolio with a certified financial advisor.
