For my birthday, one of my good friends gave me a beautiful plant. A dahlia. Given the fact that I really enjoy flowers, this was (at least in theory) a great gift. There was just one problem: I’m not very good at growing things. I actually killed a cactus one time!
Anyway, I wanted to keep these looking good because they were a gift and were so lovely. So when I got home, I set them out on my back deck where I could see them. I watered them and buried my son’s dead pet goldfish (Indians used fish to help grow corn, so I thought that would be good).
Then, the leaves started to turn yellow. I knew that sometimes happens when they get overwatered, so I stopped doing that. The stems were still turgid, but the blooms withered. I wasn’t sure why. They were getting plenty of sun and rain. It didn’t make sense.
So I decided to re-plant them in a new planter, thinking that they needed more room for the roots to grow. As I did, I happened to look at the directions for growing them. It said to keep out of direct afternoon sun. Well, there was my problem!
I guess I should have read the guidelines and followed them!
Our investment portfolios are similar to growing flowers, too. Once we choose our asset allocation and then specific mutual funds, it’s important that we know what we are doing and follow some guidelines. Your portfolio might be ‘buy and hold’, but it shouldn’t be ‘buy and forget!’
Here are some actions you should take to monitor your portfolio so it produces good results for you.
Regular Watering
Whether it’s quarterly or annually, you will want to look at your overall asset allocation and rebalance back to your intended percentages. Just like you would water on a regular basis, you want to re-balance your portfolio on a regular basis.
Prune Your Losers
Just as you would pick dead leaves off of a plant, you want to review your fund investments and see if any of them are not performing well. If, through research, you find something that no longer fits your overall investment objective or style, sell it if you need to.
Lots of Sunshine
Shine some light on the mutual funds you own by researching and understanding them. Review not only performance, but also if there have been changes or updates to the fund objective, manager turnover, or underlying investments.
Fertilize
In the financial world, you probably don’t want too much fertilizer, as that equates to BS. However, it is important to sift through the information you hear on a day to day basis that may improve your portfolio. For example, NC has a greater deviation from the norm than the US as a whole. So, when the US is in a recession, the Carolinas are in a deeper recession. By the time the US economy begins to improve, the Carolinas are already in full swing. Knowing this can help you improve your fund selections.
I’ll be honest though, sometimes keeping track of your portfolio and managing it may require more effort than you want to put in — especially if managing investments is not your forte. If you’re not quite ready to make that commitment, remember you can always outsource it to a professional.
As for me, now that I’ve re-planted my flowers and read the directions, I’m going to do a better job of watching them and keeping on top of the things I need to do to keep them growing. Here’s hoping that you’ll do the same with your investments.
Pathfinder Planning LLC provides personal financial planning advice and asset management for a simple fee to young adults and working families in North and South Carolina through group classes, one-on-one planning, and ongoing advice.
Your Financial Mom blog posts are not meant to be legal, accounting or other professional service advice. Content represents the opinion of the author only. Pathfinder Planning LLC is not responsible for the accuracy or validity of content contained in third-party comments.