Reviewing your investment strategy? Start with these following simple steps:
Calculate your portfolio’s current split across stocks, bonds, cash investments and alternative investments. This basic asset allocation is the key driver of your portfolio’s risk and potential return. Many of the big mutual fund companies and brokerage firms have account aggregation software that allows you to pull in information from outside accounts, making it easy to figure out your overall investment mix.
See if any individual stock positions account for more than 5% of your stock portfolio’s value. It’s dangerous to bet too heavily on any individual stock — and that’s doubly true if it is your employer’s stock.
Find out the annual expenses for all your funds. If any charge more than 1% of assets per year, look for lower-cost alternatives — and seriously consider market-tracking index funds.
Look up how your stock funds performed in 2008 and how your bond funds performed in 2013. Are you mentally prepared for losses like that? If not, you might adjust your portfolio now, before you find yourself panicking and selling in the midst of a market decline.