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Stay on Track With a Summertime Portfolio Review

Summer is traditionally a time for fun, family vacations and a more relaxed pace of life. But between the baseball games and barbecues, it’s a good idea to consult your financial planner for a midyear portfolio review to ensure that your investment strategies are still on track to help you achieve your long-term goals.

Benchmarking Progress

The impact of whipsawing markets on your investment returns is probably hard to ignore, and while it’s sensible to gauge the performance of your investments against appropriate market benchmarks, this is only a small part of the review process.

Clearly, your overall returns and relative performance matter. But you should keep in mind that the most relevant benchmarks are the targets that have been built into your overall financial plan, which can help your financial advisor evaluate your ability to help reach your goals.

Review Asset Allocations

More important than tracking the ups and downs of individual investments is looking at how closely your portfolio’s current composition matches up with your targeted asset allocation and rebalancing, if necessary. If one asset class has performed better than others, you should take profits and redeploy capital into underperformers. Regular rebalancing will help keep your allocation appropriate for your time horizon and risk tolerance.

It may be tempting to tweak your asset allocation by making tactical shifts into certain sectors of the market that you believe will outperform others, or moving into cash when markets are weak. But trying to time the market results more often in pain than profit.

It’s human nature to try to outguess the market, but timing is only easy in hindsight. In order to be successful at it, you have to be right twice—deciding when to get out and when to get back in. You may be better off by simply filtering out the noise of short-term market fluctuations and staying the course with a well-diversified portfolio.

Look Toward Long-Term Goals

The time to make adjustments to your allocation is when your personal situation or financial objectives have changed. Perhaps you’ve recently sold a business or celebrated the birth of a child. Maybe you’re contemplating purchasing a new vacation home or rental property, or have accelerated your retirement plans. Your financial planner can help you assess the impact of these developments on your existing investment strategies and suggest modifications to help you achieve your new goals.

A midyear review is also a good time to explore your vision for legacy and estate planning. At some point, you may realize that your assets are sufficient to maintain your desired standard of living for the rest of your life. When you reach this point, the driving concern is not so much on accumulating wealth, but deciding how best to preserve and transfer it.

Estate planning is all about making decisions today that affect where your money goes when you’re gone—either to your family, to charity or to estate taxes. During your midyear review, you may wish to discuss gifting strategies and trusts that can help minimize the impact of estate taxes and ensure that your vision for your legacy becomes a reality.

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