My employer used to send out quarterly statements for my 401K plan. It used to serve as a periodic reminder to review how my different investment accounts are performing.
A few years ago, however, they stopped sending out physical statements, but were still available online. It’s easy to log into my account online tool periodically to check my balance. But honestly, it’s been quite awhile since I’ve looked at the return rates of my investments.
Since I now longer receive a paper reminder in the mail, I haven’t been checking on my investment performance like I used to. Recently it occurred to me to check it out, and what I found was a little disturbing.
Some of the funds I was investing in were doing very well, some not so well, and some had been losing money for years.
I also found that the last time I had rebalanced my investments was over six years ago. Here’s a summary of my investments as well as their rate of return over the past year:
- IBM -11.19%
- International 0.65%
- Small Cap Value: 3.98%
- Small/Mid Cap: 7.53%
- Large Company: 14.2%
- Large Cap Growth 14.5%
- Interest Bonds: 2.75%
Shaking my head, I dove into the dozens of funds available to choose from in order to make an educated decision on how to reallocate my holdings.
I wanted to dump under-performing stock funds, as well as interest-bearing bonds. I’m still fairly young, so my investment portfolio can be a bit more aggressive.
Here’s how I’m contemplating allocating my investments in percentage of my total funds:
- Blended Funds: 20%
- Large Company 20%
- Large Cap Growth 20%
- Long-term Corporate Bonds: 20%
- Real Estate Investments 20%
Two of the funds are left over from where I started, the other three are new to my portfolio. Each of these funds has between a twelve and eighteen percent return over the last 1, 3 and 5 year terms.
The message here is that it’s easy to let your investments sit and hopefully grow. We’re taught that the stock market is something to be patient with, and to let your money grow over time. But, it’s also important to evaluate those funds from time to time and reassess if your money is working as hard for you as it could.
I neglected my portfolio for far too long, and because of that, I missed out on quite a bit of potential growth.
As I move forward, I plan to look over how my investments are doing each quarter. I don’t think I would rebalance my investments that often, but at least I’d be aware of how my money is growing or shrinking, and can react appropriately.
Have you evaluated your investments recently? How long would you wait before ditching an under-performing fund?
Editor's Note: I've begun tracking my assets through Personal Capital. I'm only using the free service so far and I no longer have to log into all the different accounts just to pull the numbers. And with a single screen showing all my assets, it's much easier to figure out when I need to rebalance or where I stand on the path to financial independence.
They developed this pretty nifty 401K Fee Analyzer that will show you whether you are paying too much in fees, as well as an Investment Checkup tool to help determine whether your asset allocation fits your risk profile. The platform literally takes a few minutes to sign up and it's free to use by following this link here. For those trying to build wealth, Personal Capital is worth a look.