Now that we're well into May, you might look around your house and yard and decide it's time for a little spring cleaning if you're the sort of person who does that kind of thing.
But even if you aren't, you can probably benefit from "sprucing up" another part of your life, your investment portfolio. Why? Because things change in your life, and while your investment and insurance products and strategies may have been appropriate for you at one time, that may no longer be the case.
So, once you decide to clean up your portfolio, what should you look for? Here are a few ideas to consider:
Avoid "redundant" holdings. Do you have too many of the same type of stocks "cluttering" your portfolio? Too many people think that, when it comes to investing, they can't get "too much of a good thing."
Consequently, if they have two growth stocks from the same industry, they add a third. Or, on the other side of the investment spectrum, if they like the steady income from their fixed income they might buy another.
Depending on your individual needs, you may find that growth stocks and fixed income can play a role in your diversified portfolio, but "overloading" on either of these securities - or any other, for that matter - can actually hinder your progress toward your financial goals. For example, if you add too many of the same type of growth stocks, you may expose yourself to a market downturn that is particularly hard on one specific sector. Or, if you divert some of your investment dollars toward additional fixed income, you may deprive yourself of needed growth opportunities.
Examine "automatic" investments. Are you still automatically moving money from your checking account into an investment that you first purchased years ago, under different circumstances? Could this money possibly be better directed elsewhere? Check your automatic purchases carefully to see if they still meet your needs.
Review your insurance coverage. When you first start out in your career, and you have a young family, you definitely need a certain amount of life insurance to replace your income, pay for your mortgage, educate your children, etc. But, as your children grow and leave home, and you finish paying for your home, your needs for life insurance will change.
Go over your policies with your investment professional to see if your coverage is still appropriate. You may find that a different type of policy can be beneficial in helping you meet other types of needs, such as estate planning.
Check your beneficiaries. Over the years, your family situation may change. To cite just one possibility, you may remarry and take on the responsibilities of a blended family. If this happens, you'll need to closely check the beneficiary designations on your investments, retirement plans and insurance policies. If you don't update these designations, your wishes may not be carried out when it's time for your estate to be settled.
By following these suggestions, you can give your portfolio a spring cleaning that should can help serve you well in all seasons.
Vivian Cubilla is a bilingual financial advisor with Edward Jones. Her office is located on 12575 S. U.S. Highway One, Suite 203 in Juno Beach. Contact her at (561) 799-3340.