It's Time to Shake Out the Dust From Your Portfolio and Improve Its Efficiency
If your mutual fund portfolio hasn't been performing as well as you think it should and you're not sure why, it may be time for a bit of spring cleaning.</br></br>A cluttered investment lineup is inefficient at best and costly at worst. By identifying overlapping holdings and gaps in your asset- allocation plan, you may be able to cut your expenses and boost your total return. If your mutual fund garage needs a clean sweep, here is a checklist of 10 things to consider:</br></br>What's your goal, and are you on track to reach it? Everybody's got dreams, but we don't always articulate them when we're investing, which financial planners say is a big mistake. Identify your goals -- saving for retirement, a college education or your dream home -- figure out how long it will take and how much you'll need to achieve them and set up individual accounts for each. Keep your eyes on the prize by regularly checking your progress. If you're not on target, you may have to invest more or take on more risk.</br></br>Too often people invest first and think about why later, or not at all, said Percy E. Bolton, a financial planner in Pasadena, Calif. "Sometimes it's like you have to be a psychologist . . . you have to discover people's goals," Bolton said. "If an account has no goal, you don't know what you're working toward. So when you go to invest, anything will do, and you're left just hoping it will do okay."</br></br>Is your portfolio diversified? You may hold a lot of funds, but that doesn't mean all your eggs aren't in one basket. Planners say people often pile into the types of funds that have worked well for them in the past or whatever they think will bring the highest return and wind up short in other areas, such as fixed income, which can provide important protection in down markets. A better strategy is to own a bit of everything.