5 Essential Investment Tasks To Complete This Month

By Craig Ford (Staff Writer), on February 16, 2010

Investing works best if you set it and forget it.  However, at least once a year every investor should set aside some time to review their investment activities from the previous year.  February is a great time to do this investment review because if you wait too long you’ll find yourself in the thick of tax season.

Photo by kaolazymonkey via Flickr.

1.  Review and Rebalance Your Asset Allocation

Most investors decide to have a certain percentage of their investments in bonds and a certain percent in stocks (via mutual funds or index funds).

However, over the course of the last year those asset allocations have naturally adjusted.

For example, if you want to have 60% bonds and 40% stocks then after this last year you might now have 65% bonds and 35% stocks.  Simply sell enough bonds to rebalance your portfolio so it reflects your desired asset allocation.

At the same time you need to ask if you should be changing your asset allocation.  The older you get the more conservatively you should invest.

This is not something that should be done every month, just once a year.

2.  Shop around for a new online broker.

Online brokers often change their rules, fees, and policies.  Just because your broker was the best last time you looked around does not mean they still are the best.

Take an hour and compare your fees, fund offerings, and customer service with other online brokers.  Another option is to check out this list of best investment brokers.  If the difference is significant consider making a change.

3.  Change your automatic deduction amount.

Many people, myself included, promote the idea of doing your investing automatically.  The nice thing about automatic investing is that it is easy to forget it.  Using this system you simply dollar cost average all of your investments.  The only problem is that at least once a year you want to remember.  If you invest based on your income (15% of your take home pay, for example) then you need to adjust your withdrawal amount based on your new income.  This is only necessary if your income has changed.  Even if it is a small deduction, make the change because small investments over time could help you become a millionaire.

4.  Review your fund performance.

Once again, the set-it-and-forget-it approach works.  However, don’t forget it forever.  If you own a fund that has consistently been underperforming the market you might consider dumping it.  Don’t buy and sell based on the whims of the market, but you must occasionally review your fund performance.  If a fund has consistently failed to match the market, sell it and replace it.

Here’s 5 Surefire Ways To Improve Your Investment Performance.

5.  Track your progress.

I’m making the assumption that you have financial goals.  If that is the case, this is a great time to see if you are on track.  It may be that you have enough for retirement and can actually scale back on your investments, or it might be that you are far behind your projected path and you need to increase your investments.  Either way, take some time this month to see where you are in relationship to your goals.

What other important investment actions would you suggest people review this month?

Recommended articles:

• Mutual Fund Investing: Index Funds vs Actively-Managed Funds
• How to Open a Roth IRA Account
• Is Now The Right Time To Invest?
• 12 Investing Mistakes I’ve Made, and How You Can Learn From Them
• 35 Common Sense Investing Rules
• How Expense Ratio Affects Long-Term Performance?
• 5 Ways to Get Comfortable with the Risks Involved in Single Stock Investing

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Craig is a fulltime missionary in Papua New Guinea who writes Money Help For Christians and Help Me Travel Cheap, a frugal family travel blog. He is the author of Money Wisdom From Proverbs, has a Masters of Divinity degree, and (most importantly) eats homemade pizza with his family every Friday night.

All posts by Craig Ford (Staff Writer)

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