Why you Should Monitor and Modify your Finances at Midyear

August 25, 2017

How are you doing with your finances so far this year? Perhaps you’re in the habit of reviewing your financial situation only at the end of the year. But also reviewing at midyear can allow you to spot any problems early on and make needed changes now so you’re on track toward achieving your goals.

Review Plan Performance1

It’s important that you review your retirement plan statements when you receive them. These provide you with recent and long-term performance information about your plan investments. To see how well an investment has performed, compare its returns with the returns of an appropriate benchmark index. Keep in mind that short-term losses can be a normal part of investing. If an investment still matches your goals and fits with your portfolio’s targeted allocation, you may want to hang on to it. However, if an investment’s return is consistently lower than the return of a comparable benchmark index over an extended period, you may want to consider making a change.

Rebalancing Required?1

How your investments perform may affect your asset allocation — the balance of different asset classes in your portfolio. If one type of asset has been performing well, you may find that it represents a higher percentage of your portfolio than you intended. As a result, you may be invested more aggressively or conservatively than you originally planned. To get your portfolio back to its original allocation, you should consider rebalancing your portfolio’s asset mix.

Smart Money Moves

In addition to reviewing your retirement plan investments, take a look at your overall financial situation. Keeping track of your spending will help you find areas where you can cut back and save more. If you’re carrying high credit card balances, paying them off will free up money you can then save for retirement. And make sure you maintain an emergency fund so you won’t need to cut back on your plan contribution to pay for unexpected expenses.

Source: DST

1Past performance does not guarantee similar future results.