cleaning lady cartoon

Content provided by Sierra Morris-Fuchs, CLS Investment Research Analyst

As the weather warms up, and I finally start to feel alive again after a long, cold winter, I always get motivated to do a thorough house cleaning. Hibernation can create some messy habits – dust collected on shelves, layers of dirt on windows, old clothes thrown and piled in the back corner of a closet – you know what I’m talking about. But when the birds start chirping, and the sun finally decides to stream through my windows again, I know it is time for spring cleaning.

Thinking about all the work that needs to be done, however, can be quite overwhelming. Where should I start? Do I have all the tools I need? What was that trick my friend told me to make things more efficient? Sometimes I need a nap just to prepare! I have learned from experience though, that putting it off just creates more work.

Similarly, spring marks a good time to re-evaluate and clean up investment portfolios. While I go through my closet — getting rid of clothes well-loved to the end of their useful lives, and those bought with the best of intentions that never found their way out of the closet — I will take the same approach to portfolios. I’ll look for investments that are played out and those that I just need to admit aren’t working, and I’ll clean them out to make room for new opportunities. (My clean-up will also include tax losses where appropriate to create more efficient portfolios.)

Many investors don’t manage their own securities, however, and leave the selection and management to professionals. But, that doesn’t mean they are off the hook. Advisors and individual investors could also use this time to ‘clean house’ in their investment profiles by asking themselves a number of questions:

  • Am I comfortable with the amount of risk I’m taking on?
  • Am I looking to increase/decrease my risk to chase performance, or is my current level truly suitable?
  • Have there been changes in my life circumstances?
  • Is now an appropriate time to rebalance my portfolio?
  • Has my time horizon changed for any reason?
  • Do I have new goals that I need to plan for?

It is very important not only for portfolio managers to do a little spring cleaning, but also for advisors and investors to tidy up, and make sure all profiles are up-to-date. Each of us doing our part allows our portfolios to run more efficiently and ensures investors are placed in the correct strategy with expectations in-line. Currently, I’m through phase one of my own spring cleaning. I’ve dusted shelves, vacuumed floors, and shined the bathroom mirrors. And you know what? The whole house feels better for it.