5 Steps to Cleaning Up Your Portfolio in 2014

Happy belated new year! So if it’s been a while since you’ve looked at your investment portfolio you might want to take another look.

If you’re in the January spirit, reworking your budget, hitting the gym and otherwise in a self-improvement state of mind, here are five ways to clean up your portfolio for the new year.

Roll over old 401(k)s
It’s time to consolidate. Make a list of your left-behind 401(k)s (and 403(b)s, 457s, Simple IRAs, and other workplace retirement plans) and find their phone numbers. If you have an IRA already, call the the rollover department at the brokerage where you hold your IRA and tell them what you want to do. If you don’t have an IRA yet, it’s time to open one. Pick a big discount mutual fund company and the rest is easy.

Looking back at the past year, stocks were a hit and bonds did lousy. That doesn’t mean you should run out and change your investing strategy but maybe it’s time to rebalance. If you intend your portfolio to be 70% stocks and 30% bonds but it’s drifted to 74% sticks and 26% bonds – sell some stock and buy more bonds.

Since stocks did well last year, it’s tempting to buy more of them but rebalancing is about controlling risk. Considering your game plan for the new year is smart investing, even if it feels wrong.

Cut fees and expenses
You don’t have to look too hard to become discouraged by mutual funds and 401(k)s high fees and expenses. The good news is the story keeps getting better, big mutual fund companies and big company 401(k)s continue to slash fees which are slowly dragging everyone else along.

Most plans charge an annual expense ratio for each mutual fund and one or more overall fees for the plan itself. Look at the complete list of funds available in your 401(k). Plenty of plans offer funds charging as much as 1.5% alongside comparable funds charging 0.1%. In other words, they offer the opportunity to pay 15 times the price for the same product.

Slim down your accounts
Even if you’ve already rolled over those old 401(k)s, you may have too many accounts or too many funds in those accounts. Look for opportunities to consolidate accounts and reduce the number of funds you use in each account. Having a whole bunch of funds doesn’t make you more diversified, it just makes a mess.

Tackling a few accounts at time will ensure that you and your money will have a happier 2014.

How have you reconsidered your investment portfolio for 2014? Leave us a comment below or on Facebook (click here)!

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