Recently, I have started compiling a list of things I don’t understand.
In the same vein of my therapist telling me to write out (literally and figuratively) my anxieties, I figure these nagging little somethings deserved a home in my Notes app. And now, apparently, in this article.
- Why straight couples are allowed to say that they are “trying for a baby” in proper public settings. Why was this sort of rhetoric ever normalized? At a dinner table it is societally acceptable for Aunt Sue and Uncle Bruce to tell us the frequency at which they are having sex (in front of the whole family) while I am eating my vegetarian Thanksgiving stuffing. Barbaric.
- Why the Bachelor franchise insists that everyone declare that they are “falling in love”. I have never heard a single person use this type of language in the real world. (You like someone, then you love them. End of discussion).
- Why people ask anyone under 30 years-old what their hobbies are. We are too young to have hobbies. I will develop a knack for gardening or working on cars in my late 30s. Please stop aging me.
- The hype around the TV show Euphoria. Why is everyone on drugs or dying at age 15? Why can’t these kids ever just grab lunch and talk about the boy they write about in their journal? I don’t know whose high school experience resembles this, but mine certainly does not.
- Why baby on board stickers exist. I did not set out on the road with some elaborate plan to crash into you and then divert at the last second because I saw a baby on board sticker. If you’re driving rudely, I will still make a scene, baby or otherwise. The baby deserves to know its parents can’t drive.
- Toe rings. End of discussion.
- How so many people find Timothee Chalamet hot. Follow up question: what is he going to look like when he’s 40?
- How I accumulate 15 different black tank tops and have a justification for keeping all of them, even though, realistically, I only rotate between my favorite 3.
This brings me to today’s topic. Fall cleaning.
(I know the reference is typically “spring cleaning” but that, too, is a thing I don’t understand. You’ve had the entirety of winter to hibernate and clean in preparation for spring. The cleaning should naturally come after summer, so you have a tidy space for said hibernation.)
Surprise, surprise: your investment portfolio also needs a regularly scheduled cleaning. And I am going to tell you how to do it in a much more informative list than the one you just read…
6 ways to fall clean your portfolio:
1. Check your transactions
I know I am not the only one who bought “Starz” on Amazon Prime for the sole purpose of watching a nostalgic Mary-Kate and Ashley movie and then forgot to cancel my subscription. It took me 6 months to realize what that $8.99 statement was on my credit card. (All told, I spent $53.94 on the film “New York Minute”. Worth it.)
Same goes for your investment portfolio. Every so often, you should check your transactions. If there are any errors or suspicious activity, report them. If there are any items you don’t understand, ask about them. I would urge you (the cynic in me) to approach every situation as if someone somewhere is out to scam you. This is to say, stay vigilant.
2. Review your financial goals
Ferris Bueller said, “life moves pretty fast. If you don’t stop and look around once in a while, you could miss it”. I’d like to imagine he was talking about your investment portfolio.
Life events (new job, new city, new partner, new baby, etc.) can all impact your financial situation. A surprise child would certainly change (financially) what you would like to achieve in the next 5 to 10 years.
In a lesser sense (sans surprise child), a review can be helpful in merely understanding if you’re on track to achieve your financial goals. If it looks less than peachy keen, you can adjust as needed (i.e., saving more money or changing investment products).
*If you’re working with a financial advisor, remember to keep them updated so they can make suitable recommendations for you.
3. Reinvest your interest and dividends!
If you don’t know what dividends are, you probably make up the 25% of my readership base that taps out for the educational portion of my articles. I have copy-pasted for your convenience (not that the 25% is reading this part):
“Dividends are like the grandparent who always slips you a $20 after you’ve gone over for dinner. When you invest in a stock, certain companies will give you part of their profits in proportion to the total number of shares held. It is a sort of quarterly or annual money gift to say, thank you for owning our shares ‘long-term’ and also, please keep investing in us.
You have probably accumulated cash in your portfolio from interest or dividends earned during the year. The sooner you reinvest, the sooner you can benefit from compound growth. Over time, this little act of fall cleaning could significantly improve the value of your portfolio.
*Some financial institutions offer accounts with a dividend reinvestment plan (DRIP) which will automatically reinvest your dividends in more shares of the company’s stock.
4. Dump the toxic ex and rebalance.
Your portfolio will change as individual investments, like stocks and bonds, increase or decrease in value over time. Rebalancing is the process of realigning the weightings of a portfolio of assets. It typically involves either selling some investments to buy others or adding more funds to restore your original asset mix ratio.
Think of it this way: when your girlfriend breaks up with a toxic ex, she needs to rebalance. Her friends and family have been neglected and our narcissistic male antagonistic has consumed all her time. During her Fall cleaning, she will adjust her time allocation and bring it back in line with her original intention.
In investment speak: say a target asset allocation was 50% stocks and 50% bonds. If stocks performed well during a period, it could have increased the stock weighting of the portfolio to 70%. The investor may choose to sell some stocks and buy bonds to get the portfolio back to the original target allocation of 50/50.
5. Organize. Please. For me.
I am already anxious about tax season. It is October 4th.
For the sake of my sanity and your own, please make sure to keep your account statements (including trade confirmations and tax slips) in one place. I promise you this: good recordkeeping will make your life easier. During your fall clean, pick up a cheeky latte and Dollarama folder (make a cute day of it!) and organize all your investment information.
- For this point, I would like you to disregard Marie Kondo’s signature phrase “discard anything that doesn’t spark joy”. Do not discard your account statements. I repeat, do not discard your account statements, (joy notwithstanding).
If you refuse to listen to me and find yourself panicked come April, you can request that your financial institution reissue statements within a certain period, (but it tends to be costly and time consuming).
6. Compare! (It is not the thief of joy in this particular instance).
Every investment has a cost.
I don’t know why that sounds so dramatic. I am simply referring to the fees paid directly or indirectly to make investments. Make sure you understand what these fees are for and the services you are receiving in exchange for them. Additionally, if you want to go above and beyond, you can shop around to make sure you are getting the best value for your money.
Until next week. Happy cleaning.