Why Your Investments Need
a Mid-Year Checkup

Financial wellness is not a one-time event. Here’s why you need to evaluate your portfolio on a regular basis.

To know where you’re going, you first need to know where you’re at. That’s true for anything in life, but especially your finances. The ability to reach long-term financial goals rests squarely on making consistently sound decisions today and tomorrow about investments, savings, spending, insurance and more. But before delving into how a financial health checkup can help you reach your goals, it’s important to understand what it is — and what it isn’t.

Just as a mid-year physical checkup isn’t a one-time event, neither is one that involves your finances.

Just as a mid-year physical checkup isn’t a one-time event, neither is one that involves your finances. Like your body, your assets change from year to year. Values increase (or decrease). Individual stocks or categories become overweight or underweight depending on the market and overall economic conditions. This means strategies and asset allocationsAn investment strategy that tries to maximize gains while minimizing risks by adjusting the percentage of each asset in an investment portfolio, according to the investor's own investment goals, risk tolerance and time frame. that worked in years past might need to be adjusted to reflect the economy and your current financial situation.

Putting individual equities, fixed income and insurance coverage on a “set-it-and-forget-it” course, not only increases the risk that you won’t reach your long-term goals, but it also means that you’ll miss the chance to sidestep any potential losses.

Making the time for a mid-year portfolio checkup also allows you to evaluate savings, assets and liabilities with an eye toward fine tuning anything that is not adequate nor aligned with your goals. A periodic evaluation of your investments will also enable you to introduce new products or strategies that better reflect your current financial standing.

Interactive Brokers (IBKR), a Greenwich, Connecticut-based securities firm in business for 41 years, empowers investors with PortfolioAnalyst, a robust performance reporting tool that provides data and analysis for all accounts from a single platform.

As part of a mid-year checkup it’s important to review how individual equities, bonds or mutual funds performed.

Your portfolio’s performance, for instance, goes beyond whether the account value has gone up or down. As part of a mid-year checkup it’s important to review how individual equities, bonds or mutual funds performed. That means evaluating whether you’re overweight in any one category (growth or income, for example) or region (emerging markets, Europe).

If you own mutual funds, take a look to see if their performance is meeting your goals and if the fund’s investment approach has changed. With stock in individual companies, it’s important to check the overall economic health of the firm today, and how it’s performing compared to its peers.

All this information will give you the knowledge you need to make adjustments to bring your portfolio back to the asset allocation mix you want. Interactive Brokers’s PortfolioAnalyst makes this easier by letting investors see summary values at a glance, and can even display information by different time periods, asset classesA group of securities that share similar characteristics, behave similarly in the marketplace and are subject to the same laws and regulations. The three main asset classes are equities (stocks), fixed income (bonds) and cash equivalents (money market instruments). or performance metrics.

It also lets investors generate reports on a daily, monthly or quarterly basis so that you’ll always have a snapshot of past and current performance. Easy-to-read color-coded charts display information clearly and accurately. And to see how your investments stack up, PortfolioAnalyst enables investors to compare their returns to more than 200 popular benchmarks, including the S&P 500A market value-weighted index of 500 large cap stocks traded in the United States and chosen by Standard and Poor’s. The S&P 500 is a leading indicator of U.S. equities., or create their own custom benchmarks.

Of course, no financial checkup would be complete without a solid understanding of the amount of money coming in and going out on a monthly basis. Make sure income including salary, rental and dividend income syncs up with monthly outlays such as mortgage, taxes, household expenses, insurance and credit card debt. And just as you’ll want a cash cushion for living expenses put away in a highly liquid account, make sure your portfolio holds a designated percentage in cash as well. This will allow you to take advantage of buying opportunities, and acts as a hedge against market downturns.

A mid-year checkup is one of the best steps you can take to make sure your investments are on track and that your financial future is secure.

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