Know your advisor

Annual check-up

In addition to keeping a watch on your portfolio to ensure each investment opportunity is suitable, you should conduct an annual check-up of your portfolio with your advisor.

An annual check-up will help ensure that you are on track to achieve your investment goals. If your portfolio is off track, ask for a plan to get it back on track as soon as possible.

Answering these three questions can help you complete an annual check-up of your portfolio:

1.

Am I on-track to achieve my investment goals?
  At any particular time, the value of your investments may be up or down. The important thing is that their value goes up over time. It is most useful to answer this question based on your portfolio's performance over a few years. This will enable you to compare your portfolio's performance from year to year. It will also let you see if, on average, your portfolio is growing or shrinking and by how much. If your portfolio is off track, then you can work with your advisor to get it back on-track before it's too late.

2.

Is my portfolio properly diversified?
  Make sure you have enough different types of investments in your portfolio so that a downturn in one or two types of investments will cause minimal harm to the value of your portfolio. Having a properly diversified portfolio can help you stay on track even in the rough times.

3.

Since the last annual check-up, what significant changes have occurred that have or may affect my portfolio?
 

Understanding what factors have or may affect your portfolio can help you and your advisor prepare for the changes so that you keep on track with your investment goals even in times of significant change. Be sure to discuss these changes with your advisor.

 

For more information on working with an advisor, check out our free Guide to Investing: How to work with your investment advisor.

Related links

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How to do an annual financial checkup new window
Though the article uses U.S. references, the basics it discusses can still apply to Canadian investors planning to do annual portfolio check-ups.