By Eric Reich
Last Thursday marked the first day of spring! Like most people, you probably have plans to spring clean your house, wardrobe, or car. Why not add your investments to that list? Here are some helpful tips to help you with this task that you should take each year to help ensure that your financial life is in order.
- Set up a rainy
day fund
It is often suggested that you should have 3-6 months’ worth of expenses in a short-term investment account in case of an emergency. I would suggest three months if you have an available line of credit or six or more months if you do not.
- Rebalance your portfolio
In many cases, something in your portfolio outperforms the rest of it. When this happens, the allocation you started the year with is not the same as what you ended the year with. Make sure that you rebalance your portfolio so the percentages are in line with your beginning allocation. If real estate was 10% and it’s now 13%, sell some to get back to 10% if that’s where your allocation should be.
- Check your asset allocation
While it is important to rebalance a portfolio, make sure that the allocation you had at the beginning of last year is still the allocation that you want. Maybe things have changed in the world that may necessitate a change in your overall allocation. What worked years ago may not be where you should be today.
- Consolidate your accounts
This can be a big source of stress for many investors. They have accounts at multiple former employers, multiple fund companies, and with multiple advisors. This can lead to a lack of organization between accounts, investments, and strategies, not to mention potentially added fees. I always tell people that diversification should take place among holdings, not accounts or, worse, advisors. I never recommend multiple advisors since, in many cases, these advisors may not be in communication with each other and may make their recommendations based only on the money they are managing, not your whole portfolio. This can be a problem because both advisors could be doing a good job for you, but the portfolio as a whole lacks diversification or a defined strategy.
- Review your advisors
If the last one applies to you, then you need to figure out which advisor is helping you the most. Are they giving you good advice? Are they looking at more than just your investments? Have they started to prepare you and your investments for retirement? Are they a specialist in an area that fits your stage of life? Remember, you don’t go to your primary care physician for open heart surgery. Therefore, don’t use an investment “generalist” if you are in a specific stage of life. The same can be said for attorneys; seek out a specialist for things like estate planning, real estate, taxes, etc.
By doing this exercise every year, you can help keep your investments on track, and you may be less likely to have any surprises that come with a lack of attention each year.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. To view form CRS visit https://bit.ly/KF-Disclosures.
Eric is President and founder of Reich Asset Management, LLC. He relies on his 25 years of experience to help clients have an enjoyable retirement. He is aCertified Financial Planner™ and Certified Investment Management AnalystSM (CIMA®) and has earned his Chartered Life Underwriter® (CLU®) and Chartered Financial Consultant® (ChFC®) designations.
