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By Christine Benz | 12-18-2014 02:00 PM

Christine Benz's 6-Step Portfolio Checkup

Morningstar's director of personal finance outlines how to gauge your portfolio's viability, evaluate your allocation, troubleshoot risk factors, and more in this special Web seminar presentation.

Christine Benz: Hi, I'm Christine Benz for Welcome to a special video session about how to conduct a year-end review of your portfolio. It's valuable to conduct such a checkup at least once a year to make sure that your portfolio is positioned exactly as you want it to be. In this session, I'll discuss the key factors to focus on as you conduct your own review.

Before we get into the nuts and bolts of checking up on your portfolio, I wanted to share with you what I consider some best practices in the realm of portfolio checkups. The first point I would make is that less is more when it comes to this. So, for most investors, a quarterly, semiannually, or perhaps just an annual portfolio checkup is plenty. Any more than that, you risk tinkering around in your portfolio and making changes that, in hindsight, appear to be ill-advised.

The next key thing to keep in mind as you conduct your own portfolio review is to keep it targeted. And to do that, I'd recommend that you use a checklist of factors that you'll focus on. That way, you cannot be distracted by some of the noise that may be around your portfolio right now.

The next thing I would emphasize is that it's valuable to progress from the most important parts of the portfolio checkup to the least important parts. That way, if you get distracted or you don't have time to conduct a full review, you will know that you've at least looked at some of the basic factors.

Another key thing I would say is that it's valuable to focus on the fundamentals of your portfolio. So, rather than focusing specifically on performance and getting hung up on why a fund, for example, has underperformed or outperformed its category average, you want to instead home in on the fundamentals of your investments. So, if you have individual stocks in your portfolio, you want to pay attention to their profitability trends, their valuations. If you have funds, you want to focus on factors like manager changes and strategy changes. Those things will help guide the real changes that you will need to make in your portfolio review process.

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