Time to review your Portfolio Investments
What goes into a portfolio review?
Determining your risk tolerance involves balancing your desire for maximizing your chances of a higher risk against the risk of suffering potential losses. You can choose to be conservative (low risk), moderate risk, or aggressive risk depending on your personal comfort with the risk/reward tradeoff that meets your needs. Knowing your risk tolerance will determine how much you hold in fixed income (bonds, cds, money market, and other holdings that have a minimal risk of losing your principal) and how much you hold in equities (stocks, ETFs, mutual funds).
Once you determine your risk tolerance and how much should be held in fixed income compared to equities then you need to determine how much to hold in international, small cap/mid cap, large cap, and specialty areas (health care, technology, etc.). Small, mid, and large cap are measurements of how large a company is (cap is capitalization). You also have to determine whether to buy value and/or growth equities. Value equities pay a yield to you throughout the year while growth equities usually invest most if not all monies back into the company to grow.
You then need to determine which investments in these sectors you should purchase. If you have investments that you are self-managing, it is still wise to contact a financial planner to review the portfolio at least once a year for a set fee. If you have a financial advisor, take the time to have conversations with him or her so that the advisor knows and understands your goals and risk tolerance. If you have investments that grew last year, you may consider selling some of the growth to “lock in” some of those gains and reinvesting the monies into another investment.
You should also make sure that your portfolio is not over-weighted in any one investment (if one holding is more than 8% of your portfolio you may be over-weighted). You also need to make sure you are not over-diversified (holding 1-2% in each investment may mean you are over-diversified). Before the year gets too busy, review your portfolio.
Securities offered through Triad Advisors, Inc., Member FINRA/SIPC.
Laura K. Schilling, JD, CPA, CFP(r), CSA
Financial Innovations, LLC | www.financialinnovations.biz
5555 Glenridge Connector, Suite 200 | Atlanta, Georgia 30342
(404) 459-2828 | (404) 459-2829 fax | firstname.lastname@example.org
Laura Schilling isn’t your typical Financial Planner. She is also a world traveler who has been to Asia, Africa, Europe, and Israel. Laura is an active member in the community, a mother of two, and a champion for each of the working mothers she employs.