1. Establish or Review Your Investing Plan
Your investing plan will include various goals, risks, and time horizons
Take a holistic approach to your investments
Establish a regular review process
2. Get Organized & Review Your Investments
Save your most recent monthly or quarterly statements
Review holdings across various accounts and asset classes
Review individual investment holdings
3. Adjust your portfolio as needed
Rebalance Your Portfolio
Consolidate accounts to keep things simple
Make contributions & any required minimum distributions
Depending on what fits your investing plan, map out when you will make desired contributions and any necessary withdrawals. You can contribute up to $18,500 into workplace retirement plans like a 401k each year. If you’re eligible, you can also contribute up to a total of $5,500 to IRAs and Roth IRAs. There are also other account types that may fit your investing goals, like an HSA (Health Savings Account) or 529 Plan for education expenses which each have their own contribution limits and eligibility requirements.
It’s also crucial not to ignore any required minimum distributions, or RMDs. For example, if you are age 70 or over with a pre-tax 401k or IRA, you will have an annual RMD. Likewise, if you’ve inherited a retirement account from a loved-one, you may also be required to take a minimum withdrawal each year. Missing RMDs can cause taxation and penalties, so make this an important part of your investment review process.
BONUS: Check your beneficiaries!!!
This has nothing to do with portfolio performance or investment selection, but is super important! Make it a habit to review the beneficiary for each of your investment accounts. If you’re recently married, you may want to ensure your spouse and not your parents is your primary beneficiary. If you’re a new parent, make an update so your child is listed as a contingent beneficiary. For a taxable brokerage account, there isn’t a beneficiary strictly speaking, but you can add a Transfer-On-Death or “TOD” instruction to pass the assets along upon your death. While you’re at it, double-check any life insurance policies for beneficiaries as well. Absent a listed beneficiary or TOD instructions, your assets will most likely go through probate court and will be divided up by a judge according to your Will if you have one, or by State law if you don’t.
“Set it and forget it” doesn’t work for investments because goals change over time. Establishing a review process to carry out at least once per year can help you keep tabs on your investments and to make changes along the way. If you find yourself stagnant or if you struggle to take the emotion out of investing decisions, you’re not alone. It can help to work with an independent advisor who knows your financial situation and who understands our human biases. Spring cleaning your investments will provide you peace of mind – so you can sleep better at night.