Snow is melting. Flowers are blooming. Grass is growing. Robins are singing. Spring has arrived. With the arrival of spring it’s now time for a little spring cleaning. After months of dark days and cold nights, open some windows and let the fresh air into your home.
When my family and I lived in Connecticut we loved the arrival of spring. Once the snow melted we’d put our yard back together. We’d walk around our yard picking up branches and tree limbs. We’d clear flower beds and add layers of mulch. On the inside, we’d open several windows and let the fresh spring air whip through our house and force the stale winter air out of our home.
Your investment portfolio may need some spring cleaning as well. The arrival of spring also marks the end of the first quarter and hopefully you’re closer to achieving your financial goals.
Here a few spring cleaning tips for your investment portfolio review.
· If you’re holding a losing investment, it may be time to sell it and move the money into a new idea. Prune your portfolio as you prune your garden.
· Do you need to trim some gains? If you have an investment worth more than 10%, 20% or 30% or more of your account, it’s time to take some gains. It’s been said trees don’t grow to the sky.
· Is it time to rebalance your portfolio? Rebalancing your account will help reduce your risk and keep your original asset allocation intact. For example, in 2009 you started with a portfolio of 50% stocks and 50% bonds, today your mix is 70% stock and 30% bonds. The stock market has soared since 2009 and, as a result, your stock and bond allocation is not aligned with your original goal. A rebalance will fix this issue.
· The spring is a great time to finish an outdoor project. Adding a deck, pool or barbeque to your home you may enhance the value. Adding small, international or real estate companies to your account may give it a boost.
· Do you need to update your will? Has your family grown? Have you added new asset classes? With the arrival of spring and the departure of tax season spend some time updating your will.
· Create a financial plan. A well-constructed financial plan will help you with your annual spring cleaning. Your financial plan will allow you to focus on your long-term goals with an occasional trim here and there.
Sitting on a deck under sunny skies is an excellent backdrop for the review of your portfolio. A small change today can bear much fruit tomorrow.
For behold, the winter is past; the rain is over and gone. The flowers appear on the earth, the time of singing has come, and the voice of the turtledove is heard in our land. ~ Song of Solomon 2:11-12.
Bill Parrott is the President and CEO of Parrott Wealth Management, LLC. For more information on financial planning and investment management please visit www.parrottwealth.com.
April 10, 2017