The Importance of Consistently Reviewing and Updating Your Investment Plan

When was the last time you reviewed the investments within your 401(k) plan or other employer-sponsored retirement account? How about the investments in your brokerage accounts? It’s not common for investors to know the answer to these questions. Many will use the “set it and forget it” strategy and hope that everything will work out by the time retirement comes around. Investment planning is an ongoing exercise. It begins with assessing your risk profile and taking a closer look at the long-term and short-term goals that you wish to attain with the portfolio you choose. Based on your time horizon, risk tolerance, and the portfolio returns you seek, you can put together a portfolio that is appropriately diversified.

The portfolio review process and frequency will most likely vary, depending on your investment strategy, lifestyle, financial goals, and risk allocation. Just like you would do an annual health checkup with your doctor to make sure that all is well, the goal of an investment portfolio review is to regularly check on your financial health as well. Established financial planning firms such as Insight Wealth Strategies will meet with most clients on a quarterly or semi-annual basis. This frequency allows the client and their advisor to regularly review their portfolio and make sure the appropriate updates are being made as things change within the client’s overall picture. 

When it comes to your retirement savings, managing your level of risk is a key factor for managing your retirement investments. Sometimes maintaining a specific risk level, based on your preference or your planned retirement age, can seem counter intuitive. Selling from a high-performing yet high-risk asset to a lower-risk asset may even feel like a bad choice. However, the decision to review your account to maintain your preferred risk level is an important part of making sure that your investments are protected according to your financial goals. 

Another important aspect of doing portfolio reviews on a regular basis is the rebalancing of your accounts. With rebalancing, you can adjust your investments to ensure an ideal asset allocation is set that matches your financial goals. For example, if you originally chose an asset allocation of 60% equities and 40% bonds, as stock prices rise, your allocation may effectively rise to 65% or 70% equities. This indicates that you must sell some of the equity investments to achieve the original allocation levels. This will also help keep your portfolio risk within comfortable limits.

Often, your risk level is associated with your age. A person in their 20’s or 30’s may have the majority of their 401(k) contributions in more aggressive, high-risk funds. Having a longer time horizon until retirement affords them the ability to weather volatility and see their portfolios recoup. On the other hand, someone nearing retirement may allocate their portfolio on a more conservative, low-risk manner due to the proximity of having to start making withdrawals. In either situation, the investor would be pulling from riskier assets and investing them in more conservative assets as they get closer to their retirement age.

Reviewing your retirement portfolio on a regular basis is just one of many ways you can take steps towards a life of financial independence and confidence. Adjusting your investment strategies based on your goals, age, and your tolerance to risk can help you maintain financial stability in retirement. Staying informed and following your advisor’s guidance is also key to planning and saving in the best way to support your financial situation post-career. To learn more about how much you should be saving, or whether your investments are on track to cover your living expenses after you retire, feel free to request a complimentary consultation with one of our advisors.

Insight Wealth Strategies, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Insight Wealth Strategies, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Insight Wealth Strategies, LLC unless a client service agreement is in place.

Insight Wealth Strategies, LLC (IWS) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Written by,

Andre Paiva

Andre Paiva

Andre joined Insight Wealth Strategies in 2018 and works as an Associate Advisor on our Advisory team creating financial plans and implementing investment management strategies for our clients. He holds a Bachelor’s degree in Business Management from University of Phoenix, he has previously passed his Series 7 and 66 licenses as well as CA life and health insurance, and is a notary public.