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End of the Year: Time to Rethink Your Investment Strategy

As always, the end of the year represents a time to reflect on the past — and to prepare for the future. While you consider your next move, don’t forget to review your investment strategy. While you don’t want to panic [3] and change your strategy as a reaction to the short-term whims of the market, that doesn’t mean that you shouldn’t tweak your plan every now and then, or make adjustments as the situation requires.

Regularly Review Your Investment Strategy

For the buy and hold investor with a long-term strategy, there are few things worse than obsessively checking your portfolio every day or week. However, occasionally checking in to ensure that your investment strategy continues to meet your needs is a good idea. Here are some items to consider as you review your investment strategy

Before you switch things up in your portfolio, consider your situation, and re-evaluate your goals and needs as an investor. Measure your portfolio, long-term, against your approaching milestones, your current needs, and what you hope to accomplish with your investment portfolio.

If something isn’t working, or if your situation is progressing, it might be time to tweak things a little bit. It’s possible to shift your asset allocation [5], as well as switch things up, if you need to. Are you more interested in increasing your income right now? It might be time to move some of your assets into an income portfolio. Do you want a little more growth? Maybe it’s time to shift some of your assets out of bonds and into stocks. Consider your needs, and act accordingly.

You can also take your tax situation into account, and make some moves that just happen to improve your tax efficiency, while at the same time adjusting your plan to better reflect your changing priorities and situation. Your life isn’t going to stay still, and while you don’t want to make drastic changes without reason, it doesn’t make sense to continue what may not be working for you. Review your investment strategy, and make the changes necessary.

(Photo: thinkpanama [6])