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Looking at Your Investments

by Kevin McKinley - November 2nd, 2014

Posted Under: investing

Your third quarter investment account statements have recently rolled in, and rather than let them sit unopened in a pile next the computer, it might be good to actually take a look at where things are, and maybe even make some changes.

What makes now better than ever is the investment climate of the past few years may have changed in the past few weeks.

To make the process a little easier, we’ll start every recommended step with the letter “R”.

1. Review

Check the balances of the account, and compare those figures to the numbers from the previous quarter or year-end balance.

Look for any changes made in the account, and if any fees or commissions were charged that were more than you’re comfortable paying.

Create a file for each account statement, and then every time you receive a new statement regarding that particular account, you’ll have a place to put it (as well as be able to retrieve the information quickly if necessary).

Finally, set up a master list of your investments with each account name, firm name, number, and account balance. If you’re really ambitious, add in any debt and loans to figure your current net worth.

This step will give you a better snapshot of your “big picture”, and will be a welcome tool if you’re not around or able to tell your family (or estate representative) where your money is located.

2. Re-evaluate

Chances are you haven’t dug deep in to your investments in a long time, if ever. There’s no time like the present to look at your overall asset allocation, as well as the components of the portfolio.

Start with the mix: how much of your investments are made up of cash and money markets, bonds and bond funds, and stocks and stock funds?

Does the allocation still fit with your need for reward and tolerance for risk? This is an especially pertinent question if the “stock” or “growth” portion of your portfolio has grown to a too-big percentage, and you’re nearing the time when you might need the money.

You can conduct your own fire drill by asking yourself how you would react if the bond funds were to drop, say, 20% in a particular year. And for the stock funds, use a 40% hypothetical decline to see what you can tolerate.

If either or both would cause you a significant amount of anxiety, perhaps it’s a good time to dial back on the aggressiveness of your investments, and shift some or more of your money into money market accounts and certificates of deposit.

Even if you’re still happy with the general allocation, are the funds being used the lowest-cost options available, or could you do just as well (or better) with less-expensive options? You can find and compare fund expenses at

3. Rebalance

Whether you just want to move your portfolio to a more conservative (or aggressive) allocation, or want to replace some funds with others, there are a couple of areas of which you should be wary.

First, there are the potential costs. There could be commissions or charges to sell your old investment, and/or buy a new one. Note that if you’re moving money around in your at-work retirement plan, you’re unlikely to incur significant fees when you make changes.

Second, for assets held outside of retirement accounts and annuities, there are the potential taxes on any realized. Check the cost basis of any investments you are selling, and get an idea as to what the tax bill might be if you sell some or all of a profitable investment.

Incurring a tax on a gain isn’t reason enough not to sell. But you should be aware of the eventual tax, especially if it’s possible to wait until the profit becomes a lower-taxed long-term gain, rather than a higher-taxed short-term gain.

Next week

We continue the theme with some relevant rhetoric for workers with retirement plans: “raising your contribution amount”.