Publication: Chicago Sun-Times (IL)
Author(s): Mark LaSpisa, Special to The Chicago Sun-Times
Date: August 20, 2007
Section: Financial
Page: 54
Q: When should I review my investments?
A:The theory behind investment reviews is to review your investments on a frequency that allows you to catch material and necessary changes to your portfolio.
Review it too often, and you can become emotionally attached to an investment (or sector), which can lead one to either fall in love with an investment or to overanalyze (trying to be too perfect). Result: constantly changing holdings, and chasing last month’s hot investments. It will also cause too many changes, and drive up transaction cost and the tax liability of your portfolio.
Review your portfolio too infrequently, and you will find yourself missing a needed rebalance which could increase your volatility. Result: overexposure to one investment or sector (think Enron).
Most CFP professionals suggest reviewing a portfolio quarterly.
Portfolio characteristics to consider in each review should include:
Investment holdings or asset class weighting, taxation, performance, cash flow needs, volatility, principal draw down and, for those over 70, required minimum distributions. If the thought of doing this on your own makes you feel uncomfortable, consider utilizing the services of a professional.
Mark LaSpisa is a certified financial planner, and a member of the Financial Planning Association of Illinois
Charles Schwab
TD Ameritrade