You probably have a few big things you’re saving for—a house, new car, a child’s education. For instance, if you have your eye on a new house or your children’s education, you might want to make some adjustments to reflect the current real estate picture and tuition costs.
Check your investment mix. Does it still meet your needs and preferences? Did market performance lead you to have more money invested in a particular area of the market?
Also, look at specific investments and see whether they continue to make sense for you. If you invest in mutual funds, check to see whether any of them have changed their objectives or “style.” If you own stock, look at the companies’ current picture and prospects, and decide whether they justify keeping it.
If you have your eye on a new house or your children’s education, you might want to make some adjustments to reflect the current real estate picture and tuition costs.
If you haven’t already done so, make sure you have a mix of stocks, bonds, and short-term investments that you consider appropriate for your investing goals. Take into account your financial situation, tolerance for volatility, and when you will need the money you are investing.
For instance, you may want to allocate a greater portion of your investments to stocks—which historically have offered the highest potential for growth over time—the longer you have to invest and the greater your tolerance for risk.
On the other hand, if you’ll need the money in just a few years—or if the thought of potentially losing money makes you too nervous—consider a higher allocation to generally less volatile investments such as bonds and short-term investments. By doing this, of course, you’d be trading the potential of higher returns for the potential of lower volatility.