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Use These Check-Up Tips To Maximize Your Stock Market Profits

Plenty of people subscribe to the “set it and forget it” mentality when it comes to investing - depositing a bunch of money in their 401k (among other accounts) and stepping away to let the stock market work its magic. And while the hands-off approach is one of the more appealing aspects of investing, there are benefits to checking up on your portfolio, whether that’s once every few months or only once a year.

A portfolio check-up includes looking at your investment goals, your risk tolerance, your time horizons per each investment, and how you are situated financially.

When you’re checking on your portfolio, there are a few tips to keep in mind that will help you make appropriate adjustments and end up maximizing your profits in the long run. Here are some top tips for portfolio checkups.

1. Check How Your Goals Are Aligned With Your Investment Journey

One way to check up on your investment goals is by using the SMART acronym. This means your goals are

  • Specific: Calculate your specific FIRE number.

  • Measurable: this will give you a measure of how far away you are from achieving financial independence.

  • Achievable: Is your goal achievable? If your expected annual expenses are based on your current budget, it should be.

  • Relevant: Take a look at your current situation. Is your FIRE number still relevant to your current situation? Will you still be living in the same way when you reach retirement?

  • Time-Based: How much time will it take to reach your FIRE goals based on these investments and their annual returns?

These are all vital things to consider when checking up on your investment portfolio and your FIRE goals. Using SMART is a good way to ensure you’re keeping up with your goals.

2. Reconsider Your Asset Allocations

It’s important to look at the asset allocations in your portfolio and consider whether you need to rebalance them. Your initial asset allocations relate to your current risk tolerance, but over time the stock market changes, and your asset allocations can shift. A big shift in the market can lead to your allocations being misaligned with your risk tolerance.

Rebalancing is an important part of investing for FIRE as it helps you to minimize risk and optimize returns, particularly as your portfolio grows and your allocations change. It is one of the primary reasons why the “set it and forget it” mentality isn’t always going to work.