We’re all for “set and forget” investment portfolios, but keep in mind: That’s not literal. You shouldn’t completely forget about your investment accounts, because every now and then, they need a tune-up. Here are the three questions you should ask when rebalancing your portfolio.
Photo by Alexander Henning Drachmann
Wealthfront explains that you want to make sure your portfolio is adequately balanced, meaning you’re invested in all the right stuff. As you get closer to retirement, for example, you’ll probably want to be more invested in bonds, which are low risk, and less invested in stocks. Here are the three questions they say you should ask yourself:
- How much am I really paying in fees? Investopedia offers a guide to investment fees here.
- Am I holding too much cash? Having an emergency fund is great, but too much cash means you’re losing the opportunity for your investments to grow over the years. Of course, if you’re going to need a large amount of amount in the near future, you probably do want to keep it liquid and accessible — and that means cash.
- Is my portfolio well diversified? Again, you want to make sure your assets are properly allocated. Make sure you have the right mix of stocks, bonds, alternatives and so on.
These three questions are just meant to start you off, so you’ll definitely want to read about each one in greater detail. They offer some insight at the link below.
Are You Invested the Right Way for 2016? [Wealthfront]