By Brooks V., Branch Manager and Guest Blogger
For some, reviewing your investments simply means opening your monthly statement to see if your account balance has gone up or down compared to last month. If that is you, it is time to consider changing your ways. Checking your account routinely and looking at your statement is a good start, but it’s not enough.
How Often Should You Conduct an Investment Review?
Generally, it’s a good idea to perform a thorough review of your investments and accounts at least once a year but quarterly may be better. Depending on how many times you trade, it may make more sense to do a quick post-mortem analysis once a month to help your trading become more consistent. Whatever method you choose, reviewing the following may help you determine how your investing approach may need to be tweaked so you can potentially realize a greater return on your investments.
Your Needs - Life is always throwing a new curve at you. It may be a new job, marriage, inheritance or retirement - any one of those events can impact your needs and investing strategy, causing you to be more or less tolerant of risk. When you reassess your needs, reflect on what has changed within the last year or quarter, and see if your holdings still make sense for you and your goals.
Your Investments - What I like to do when reviewing my investments is log in to my Scottrade account and use the Positions page and the Quotes and Research page to assess my current holdings. With the Positions page, I can evaluate a security’s performance, analyze short-term trends, see its average daily trading price over the past 100 days, and find out what the price-to-earnings (P/E) ratio is. The Quotes and Research page lets me view recent news, stock earnings and fundamental indicators, which helps me identify any changes with a particular investment. Using those research tools in your review can help you compare and better evaluate your holdings.
Your Capital Gains - Tax time will be here before you know it. Are there ways for you to minimize your tax burden before the end of the year? Reviewing your cost basis and projected capital gains can help you determine if you should hold onto an investment longer before selling it, take a loss on a different investment or explore more tax-efficient investments. Consider using the Gain/Loss & Tax Center tool to help you assess your potential tax liability and tax strategy.
Your Accounts - Just like your investments it’s important to evaluate the types of accounts you have, from brokerage to retirement, margin and bank. For instance, you may want to make additional contributions before the end of the year to max out your Roth IRA, or transfer additional funds to your Scottrade Bank® account so they are easily available when it’s time to invest in an attractive security.
How often do you review your investments and what do you evaluate?
Also of Interest:
- Why a Trading Journal Can Be Important for Traders
- Video: Analyst Ratings & Reports for Your Positions
Brooks V. has been with Scottrade since 2008. He has 14 years of industry experience and manages a Scottrade branch office in Bradenton, Fla.
The examples and strategies described in this article are for information purposes only and their use does not guarantee a profit.