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The Short Answer

Year-End Portfolio Checkup in Five Steps

Troubleshoot problems now to improve your bottom line.

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Many of the basic rules of investing are counterintuitive. For example, rising interest rates may be good news for those shopping for certificates of deposit and other short-term savings vehicles, but they're generally bad for bond funds. And here's another zinger: The lazy investor is often more successful than the hard-working one.

If you're checking in on your portfolio holdings every day--or worse yet, throughout the day--you may be tempted to trade more than you need to. In turn, you may run up high tax and transaction costs, and you're also more likely to chase hot-performing stocks and funds in the hope that they'll continue to outperform. That can be a recipe for disaster.

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Christine Benz does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.