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- Time for "Spring Cleaning" of Your Investments
Time for "Spring Cleaning" of Your Investments
By Derrick P. Martinez Published: 03/01/2010
Spring is here — time to spruce up
your house, get rid of clutter and get
things organized. But this year, go beyond
your home and yard when you do
your spring cleaning and look for ways
to rejuvenate your investment portfolio.
Of course, you don’t have to take
an “out with the old, in with the new”
approach just for the sake of changing
things up. But to consistently make progress
toward your financial goals, you may
need to make adjustments in response
to changes in the financial markets, the
economy and your personal situation.
And springtime is as good a time as any
to take a fresh look at your investment
situation. So consider these suggestions:
• Dispose of things that aren’t working.
Whether it’s a burnt-out computer,
a non-vacuuming vacuum cleaner or a
treadmill that lost its grip back when “the
Web” was reserved for spiders, we all
own things that are no longer useful. And
the same may be true of some of your
investments. If one hasn’t performed the
way you had hoped, and you’ve given
it adequate time, you may be better off
by replacing it and using the proceeds to
purchase another investment.
• Get rid of duplicates. If you went
through everything in your house, you
might find several items that do the
same thing. Do you really need two
toaster ovens? And how many radios
can you listen to at one time? If you
looked at your investment portfolio in
this same way, you might be surprised
to find some redundancies. For example,
do you own several stocks issued
by similar companies that make similar
products? This might not be a problem
when the stock market is booming, but
it could be a definite concern if a downturn
affects the industry to which these
companies belong. Always look for
ways to diversify your holdings. While
diversification, by itself, can’t guarantee
profits or protect against loss, it can help
you reduce the effects of volatility.
• Put things back in order. Over time,
and inadvertently, the spaces in your
home can get “out of balance.” Perhaps
you have too many chairs in one corner,
your at-screen television is crowding
out your family pictures, or your new
desk takes up too much space in your
home office. With some rearranging,
however, you can usually get things
back in order. And the same need for
rearrangement may apply to your portfolio,
which might have become unbalanced
with too much of one investment
and too little of another. This situation
could undermine your financial strategy,
especially if the imbalance means
you are taking on too much risk or, conversely,
if your holdings have become
too conservative to provide the growth
you need. So look for ways to restore
your portfolio to its proper balance —
one that reflects your risk tolerance,
time horizon and long-term goals.
By giving your portfolio an annual
spring cleaning, you can help make sure
it reflects your current needs and is positioned
to help you make progress toward
your key financial objectives. And
you won’t even have to get near the dust
cloths or furniture polish.
This article was written by Edward
Jones for use by your local Edward
Financial Advisor.
