—  ANALYZE  —

Now that you’ve made and executed your plan, it’s time to analyze your decisions.

When you are your own investment advisor, there is no such thing as a set it and forget it portfolio. All portfolios, both active and passive, need to be managed to ensure the goals are on track to be accomplished. While everyone’s interest level and time availability is different, it’s prudent to stay informed about the latest economic and earnings events which may affect your portfolio. At the same time, it’s just as important to not become overwhelmed with information to the point where making decisions is a difficult process for you. At a minimum, you should be reviewing your portfolio once per year, while daily or even weekly market monitoring is likely excessive for the average person.

—  MONITOR THE MARKETS—

And not just the markets - yourself as well.

There are many ways to keep informed about the markets while not getting inundated with excess information. Investors with little free time on their hands often turn to newsletters and investment websites such as this one to help cut through the noise each week. Monitoring the markets does not mean a background in finance or an ability to understand complex financial statements is necessary to succeed. Instead, it’s more about having a good understanding of your investment objectives and the securities in which you are invested. This will be helpful when judging a company’s performance, for example, to make sure they are delivering in accordance with your expectations.

And don’t forget to monitor yourself. How are you feeling about your selections? Are you panicking at all; are you worried that you bought at the wrong time or that your investment objectives won’t be met in time? Now is a good time to take personal inventory and understand your own personality a bit better. Begin by re-reading your investment plan. You can click the button below to view a list of common behavioral biases investors typically exhibit, and learn how to better control and adapt to them.

—  EVALUATE YOUR PERFORMANCE—

Always compare your progress against a benchmark.

I keep saying it, but remember that you are your own investment advisor. If you were paying for advisory services, wouldn’t you want to have an objective way of measuring how well your portfolio is performing? It’s so important to create a benchmark so that you can objectively evaluate your portfolio’s performance. Be upfront with yourself with how well your strategy is working and hold yourself to the same degree of objectively you would hold a professional to.

Portfolio attribution is a common process investment advisors provide their clients with. Click the button below to learn more about the right way to evaluate performance.

—  REBALANCE YOUR PORTFOLIO—

Ensure your your strategic asset allocation is reflected in your portfolio.

Rebalancing is the act of selling outperforming securities and using the proceeds to purchase underperforming securities. It’s often done in response to a significant change in the makeup of your securities, such as equities outperforming fixed-income securities during a strong bull-market run. Asset class allocations can change quickly as well, so implementing a method to keep track of your strategic asset allocation would be well advised.

There are two main options investors have when deciding when to rebalance: time-based (e.g. on a fixed schedule) or weight-based (e.g. when an asset class allocation moves out of its range). Neither option is superior to the other and is entirely up to you. Click the button below to learn more about how to rebalance your portfolio.