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Tuesday, February 20, 2024

How to Do a Half-Year Portfolio Check

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And while’s there’s nothing particularly special about July versus any other time of year when it comes to checking your investment portfolio, reviewing your holdings in the middle of the year is a good reminder to assess your goals and stop to think about whether your current asset allocation can help you meet them, says William Moran, senior vice president of wealth management at Merrill Lynch Wealth Management in Washington, D.C.

We know exactly where we stack up against yesterday, last week, or last month for our “personal benchmarks,” he says. You can then calibrate your portfolio to match your goals.”

Zar Toolan, head of advice and research for Wells Fargo Advisors in St. Louis, calls a mid-year touchpoint your “investing step count.”

The following tips can help guide every investor conduct an assessment of their investment portfolio and its progress in the first half of the year:

Over the past three years, Wells Fargo Advisors saw that when investors stuck to their investment plan, they outperformed those who did not by 2.2 percentage points annually, Toolan says. Over time, that could mean the difference in an investor retiring at age 60 versus age 65.

Look At the Big Picture
A mid-year portfolio check-in should involve more than just how your investments have performed since Jan. 1, says Greg McBride, chief financial analyst at Bankrate.com. It’s about a holistic look at your 401( k) and individual retirement account contributions, savings and debt, and how your investment portfolio and financial plan help improve your overall situation.

Instead, each investor should be looking to hit their personal best.

A smart investor will want to be pacing their assets along the way so that the portfolio will be positioned to persist through the market’s downs and ups, he adds.

” Any weakness in the market in the second half of the year can and should be an opportunity for investors to rebalance and position their portfolios for longer-term trends,” Moran says.

Pay Attention to Short-Term Opportunities
A mid-year check-in is also a good time to see if you’re maximizing opportunities to create more income in the market.

You have half a year’s paychecks still to come,” McBride says. If you’ve already made your 2019 IRA contribution, start putting aside cash to make your 2020 contribution as early in the new year as possible.”

” Because at the end of the day, that’s all that matters,” Moran says. “We advise clients to keep their long-term goals in mind when planning their investment strategy, and to take advantage of market activity, up or down, in the near term while relying on diversification as the best line of defense against volatility.”

We know exactly where we stack up against yesterday, last week, or last month for our “personal benchmarks,” he says. “In that same way, you should also know what your personal investing benchmark is. You can then calibrate your portfolio to match your goals.”

” Just like your daily step count is probably not benchmarked to that of world record marathon holder Eliud Kipchoge, neither should your portfolio be benchmarked to an index like the S&P 500,” Toolan says.

Don’t rely on the S&P 500 as your benchmark.
Look at the big picture.
Ignore the noise and stay diversified.
Pay attention to short-term opportunities.
Don’t Rely on the S&P 500 as Your Benchmark
Far this year, things seem to be looking good in the overall stock market: the S&P 500 just posted the best first half of the year since 1997, after closing out the period with the best June since 1955, Moran says. You should keep and ignore the hype focused on your asset diversification needs based on your goals.

Don’t worry if your asset allocation needs to be changed.

A financial advisor can help you discern these opportunities in a way that aligns with your long-term financial plan.

Can your investment portfolio survive a stress-test against various market scenarios or economic conditions? If it can, it can be a blessing, not a curse.

Ignore the Noise and Stay Diversified
Far this year, U.S. stocks are reigning, but that doesn’t mean you should jump on board and put all your investment eggs in that basket: “Diversified portfolio construction requires discipline across asset classes, cycles and sectors,” Moran says.

You have half a year’s paychecks still to come,” McBride says. If you’ve already made your 2019 IRA contribution, start putting aside cash to make your 2020 contribution as early in the new year as possible.”

” The more you stick to your plan, the more likely you are to perform in line with your life’s goals,” Toolan says.

” If you have some new money to invest, or you’ve had some cash on the sidelines, work with your financial advisor to leg back into the race,” Toolan says. “Dollar-cost averaging, or putting a specific amount of cash to work each quarter or each month, is a great way to smooth the pacing toward your financial goals, while taking advantage of market opportunities.”

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