You Need A Financial Review

The market is in a constant state of change.  Investments that are growing by leaps and bounds today may be flat tomorrow.   Your personal situation is also constantly changing; you want your investments to change with you.   The way to make that happen is to review your financials periodically.

What You Want To Review To Cover All Basis

#1 – Your Financial Goals

Your investments will change as your financial goals change.  Different goals require a different approach.

When you are saving for the purchase of a home, to keep your money readily available you will use more short-term investment vehicles with less risk.   When you are investing for your retirement, you will invest in longer term investments perhaps with more risk since your money will be invested in the market for a longer period of time.

Financial planners suggest that you review your investments at least once a year to make sure they still match or compliment your investment goals.

#2 – Your Asset Allocation

Financial review and asset allocationYour asset allocation is the mix of your investments between stocks, bonds and money markets or another cash equivalent.   This mix changes as the market changes and as the performance of the investments change.   You select your mix and you can rebalance it when it goes out of balance.   You need to periodically check your asset mix to make sure they are in line with the percentages you originally started with.

You also want to check on the diversification of your portfolio.   Are you invested according to your own personal level of tolerance to risk?   The level of risk and your time horizon play a part in how you spread your money among stocks, bonds and cash.

Take a risk tolerance quiz to find out what your level is, and invest accordingly.

#3 – The Performance of Your Investments

On a regular basis you need to check the performance of your investments to make sure you are not falling in love with an investment.   If you check the performance of your investments too often, you can turn concern into panic and that is never a good thing.

#4 – Re-Interview Your Financial Planner

Keep your financial planner on their toes; it never hurts to re-interview them.   Make sure they still have your best interests in mind when they work on your account.   If you financial goals have change, you need to help them help you, let them know about changes in your life.  They are only as good as the information you give them.