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If it has been awhile since you last looked at your portfolio, or even if you have a regular routine of investment actions you take, these are the top 4 things that I believe are essential to effective management of a portfolio. It does not matter if you are do-it-yourself dividend growth investor or use the services of a financial planner, these are things that all investors should do on a regular basis to ensure an effective portfolio.[ad#tdg-embedded]
1. Check your Asset Allocation
This is the single most important thing when it comes to managing your portfolio. If your asset allocation is not diversified then you are doing it wrong! As a long-term investor then it is essential to ensure that you own a broad selection of investment assets such as long term value, small-cap value, REITs, short-term bonds, inflation protected bonds, etc. Do some research on an asset allocation that fits with your style and make sure your portfolio reflects it.
2. Check the Fees you Pay
As I discussed in a post I did on the Tyranny of Investment Fees, fees take larger and larger chunks out of your portfolio as time goes on. Just as compound growth works in our favour, fees compound at the same time and can offset many of those gains. Right now, go and check the MERs, brokerage commissions, trustee fees, etc. and ensure they are as low as possible. If you have no idea what low is, do some research for the asset class you are comparing and find out.
3. Verify Your Investment Objectives and Ensure they Match Your Actual Portfolio
Every investor should have investment objectives that guide their investment actions. If you don’t have any, set some up now. It can be as simple as saving $1,000,000 for retirement in 2039. If you do have objectives, do a review of your portfolio and ensure that each and every asset you hold has a place in your portfolio and is fulfilling the need it should. For example, I invest in inflation protected bonds to minimize the volatility in my portfolio. As a long-term investor saving for retirement, this is important to ensure that I do not lose too much when the market decides to misbehave.
4. If You Hold Individual Stocks, Check Their Performance
This one sounds like a no brainer, however I know lots of people who buy dividend growth stocks never to check in on them again. If you have individual stocks, do some analysis on them to ensure revenue and EPS are growing and that they will be able to afford to grow that dividend for years to come.
Investing does take some work – these are things you can do now to check in on your portfolio.
I am unfamiliar with inflation protected bonds. Could you give me a source for my research?