Three Main Questions to Ask When Setting up Your Investment Portfolio
We are all for set and forget portfolios , but keep in mind: this is not literal. You shouldn’t completely forget about your investment accounts because they need to be set up from time to time. Here are three questions to ask when rebalancing your portfolio.
Wealthfront explains that you want to make sure your portfolio is balanced enough, which means you are investing in all the right things. For example, as you get closer to retirement, you probably want to invest more in bonds that are low risk and invest less in stocks. Here are three questions they think you should ask yourself:
- How much commission do I actually pay? Investopedia offers a guide to investment fees here , and you can use a tool like FeeX to check yours .
- Do I have too much cash? Having an emergency fund is great, but too much money means you are missing out on the opportunity for your investment to grow over the years. Of course, if you need a large amount in the near future, you probably want it to remain liquid and affordable – which means cash.
- Is my portfolio well diversified? Again, you want to make sure your assets are properly allocated. Make sure you have the right mix of stocks, bonds, alternatives, and so on.
These three questions are just for getting started, so you’ll definitely want to read about each of them in more detail. They offer some information at the link below.
Did you invest correctly in 2016? | Wealthfront