The 5 Steps of a DIY Annual Investments Review
- Scott Frank
- Jan 16
- 2 min read
Updated: Mar 13
In this episode of “Real Personal Finance,” we’re looking at five things you can look at regarding your investments in the new year. Investing is not a set-it-and-forget-it process, and following these five steps can help you keep your financial plan on track to meet your goals.
First up, if you take nothing else away from this episode, just take some time to know what you have. All too often, investors have no idea what stocks they’re actually invested in, what their net worth is, how much debt they have, etc. Use a tool like Monarch Money or Quicken to pull all of your accounts together – investments, bank accounts, mortgage, etc.– so you can see exactly how much you own and how much you owe.
Once you look at that, then it should be easy to identify your asset allocation. How much is in stocks and how much is in bonds? A good rule of thumb here is that the sooner you’ll need the money, the fewer stocks you should have.
Next, you want to consider your diversification. Even if your stocks/bonds ratio is exactly where you want it, if your stocks aren’t properly diversified then there’s a problem. All too often, when we drill down a little bit, we find that investors only own, for example, U.S. stocks or tech stocks. Diversification is a key tool for protecting yourself from overconcentration.
Fourth, consider your tax allocation. How many of your accounts are in pre-tax accounts (e.g., IRAs) and how many are in post-tax (e.g., Roth IRA)? If you review this during your working years, you are doing your future self a huge favor by improving your tax efficiency in retirement.
Lastly, once you have looked at all of these steps, it’s time to rebalance your accounts. It may sound like a lot, and that’s one of the top reasons people hire a financial advisor – to optimize their accounts on an ongoing basis. Tune in to learn more!
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Money can be confusing—but it doesn’t have to be. When you’re able to understand the complexities, you can make better decisions to improve your daily life. Are you ready to align your money with your ideal life? Connect with us at Stone Steps Financial or Flow Financial Planning.
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