US News and World Report had a little piece where they discussed some good New Year’s resolutions related to retirement and I thought that I’d put each of them through their paces. The third retirement resolution was to examine your investment portfolio.
The New Year is the perfect time to look over your various retirement accounts and make sure you are getting a good return on your investments. “Over the long term, diversified stocks and bonds should return you 7 percent,” says Jonathan Pond, the author of You Can Do It! The Boomer’s Guide to a Great Retirement. “The average investor makes about 4 percent because they are perfectly happy to hold on to underperforming investments or they don’t select good mutual funds or good investments.” Pond recommends a diversified portfolio, selecting good investments, and continuously monitoring those investments to make sure that you average at least a 7 percent return.
I definitely agree with this one, you should examine your investment portfolio once a year, preferably right before the end of the year so you can take advantage of the wash rule (where your profitable investments can balance out your losses from a tax perspective) but checking right now is better than not checking at all. Remember to reevaluate all of your investments given the current economic situation and that you should consider re-balancing if your asset allocations are too far out of whack given large gains or losses.
Source: US News and World Report