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“Decluttering the pesky nest egg ranks high among investors. Now is a great time to snap into action.”
Investment clutter can easily develop from a variety of sources. The number of accounts opened, types of risks incurred, type of advice sought and style of adviser hired are just a few starting points that contribute. Some of the clutter often falls to the back of the closet, never to see the light of day again.
So I ask: “Is your investment closet cluttered with plenty of stuff?”
The stuff was likely purchased over several years and from multiple providers. The passage of time transformed it into a muddle that typically no longer serves its intended purposes. Perhaps, the investment closet has not been purged for longer than anyone cares to remember. If it feels like a mishmash, it probably is.
I keep tabs on portfolio requests seeking fresh opinions. The majority of cases hold 15 to 35 investments, primarily mutual funds and assortments of individual stocks. Keeping track of such selections is not easy for most investors. Overlap often makes its way into portfolios. The good news is that the best time to declutter the jumble is when stock prices are at or near their highs. Like now.
Spot the clutter
Accordingly, I highlight critical signs that recognize “cluttered investing”.If you spot any of these in your investment closet, you have some work to do:
- Written investment plans are missing.
- Retirement projections do not exist.
- Asset mix targets are not established.
- Owning too many investments and accounts.
- Investment selections no longer fit the goals.
- Stock allocations are too high for comfort.
- Investment risks incurred are not managed.
- Portfolio diversification is lacking.
- Mutual fund costs and exit charges are not clear.
- Duplication of securities inside mutual funds owned.
- Investments are substantially selected from one provider.
- Rebalancing strategies have been forgotten.
Cluttered nest eggs play no favourites. They affect active and passive portfolios, novice and seasoned investors alike. Spenders and accumulators also experience similar outcomes. Nobody is immune.
Be sure to carefully examine your entire investment closet. Just a few signs of clutter can be problematic for the long run results. This exercise may require professional assistance.
Your mandate is to parlay the nest egg into manageable investments that reflect goals you seek. Ideally, you want to own sufficient investments that provide broad diversification without fuss. Make sure that emotional attachments to your picks do not become stumbling blocks to the decluttering process.
If you have stockpiled a cluttered nest egg, face it head on. I recommend initiating appropriate steps to sort out your situation. Move swiftly without looking back in the rear view mirror.
No regrets please.
Adrian Mastracci, Discretionary Portfolio Manager, B.E.E., MBA started in the investment and financial advisory profession in 1972. He is currently a portfolio manager with Vancouver-based Lycos Asset Management Inc. He graduated with the Bachelor of Electrical Engineering from General Motors Institute in 1971, then attended the University of British Columbia, graduating with the MBA in 1972.
