For many of us, a portfolio of investments is like a junk closet: It starts out organized, but gradually collects random stuff until it needs some serious cleaning.
But unlike cleaning a closet, cleaning your portfolio can save (or even earn) you money.
The first step is to look at the number of accounts you have. Over our lives, we tend to accumulate accounts as we move and change jobs, leaving us with many we don’t need. So, go through your accounts, and consolidate.
First, close down all but one brokerage account for taxable assets. Putting investments in one account makes it easier to monitor your asset allocation, which is your mix of stocks, bonds, and cash.
Additionally, doing so could lower fees. Ensure you are dealing with a stable brokerage that is or will quickly become familiar with your financial situation.
Then, roll all of your tax-deferred retirement assets into one plan. In addition to allowing you (or your advisor) to better monitor your asset allocation, consolidating 401(k) and Individual Retirement Accounts (IRAs) will make it easier to calculate the required minimum distributions you must take from those accounts once you pass age 70 1/2.
Once your accounts are consolidated, you’ll want to look at your investments, asking if they align with your long-term goals. At this point, it’s important to discuss your objectives with your advisor, particularly when you’re thinking about selling, as doing so can result in capital gains and losses, and a potential tax impact.