Spring clean your financial portfolio

The economy has had a rocky year, with persistent inflation and interest rate hikes. The S&P 500 lost more than 18% in 2022 according to Forbes.

With volatile markets, it’s crucial for you to stay on top of your investments. Whether you manage your own financial portfolio or entrust it to the experienced care of advisers, here are some tips for spring cleaning your investments.

If you tend to throw away quarterly reports or monthly summaries without perusing them, you could be missing out on an opportunity to track which of your holdings are doing well and which ones aren’t.

The U.S. stock market is in the fourth bear market of the 21st century, meaning many stocks have declined by 20% from their peak values in the fourth quarter of 2021. While it’s not a great time to sell if your stocks have taken a tumble, an investment adviser can help you identify weaknesses and strengths in your portfolio to inform your investing strategies moving forward.

"Evaluating the performance of your portfolio isn’t easy," said Walker. "You have to know what you’re comparing to. 2022 is a classic case. In 2021, almost everything was up. Last year if you managed to avoid big losses, then your investments are probably doing well. It really depends on what your money is invested in."

If you have experienced changes in your job, lifestyle, or family, your long-term goals may have shifted, as well.

For example, if you’re approaching retirement age, it might be time to consider shifting from a position of moderate risk to something more conservative. This might mean moving from stocks to cash, savings accounts, and bonds. If you recently got a raise, consider speaking with an investment adviser about how to invest some or all of the extra cash.

"With recent big increases in interest rates, it is particularly important to review your accounts to make sure you don’t have money that is stuck earning very low rates," said Walker.

Identity theft, scams, and fraud are on the rise, so even the most secure accounts can be compromised. This is why it’s important to review your transactions regularly, watch for suspicious activity or errors, and talk to your adviser if you have any questions.

While the easiest way to handle your accounts is to let your money sit in a savings account or a long-ignored 401(k), it likely isn’t the most financially effective method. If you have multiple retirement or savings accounts, consider combining them in a brokerage account to make tracking their performance easier.

"A brokerage account is a wrapper you can put different types of assets into and you get consolidated reporting," said Walker. "It is a way of holding investments. Instead of going to all the separate components, you’ve got one place to go that can provide all of your account reports and tax documents without having to interact with more than one entity."

Another financial strategy is to hire an investment adviser, who can review all of your holdings, and help you identify ways to invest your money more effectively.

"Many people have accounts that were opened long ago, and they have not reviewed their investment choices since." said Walker. "An independent financial adviser can give independent advice. A lot of retirement accounts are not set up as effectively as they could be."

Small steps like these now can ensure big impacts for a more joyful, financially secure future.