Drawers overflowing with socks and closets bursting with shoes are hallmarks of a cluttered home. But investment portfolios can quickly become a mess, too.

Portfolios overrun with too many securities including bankrupt and defunct companies, and investments spread across too many accounts, can be distracting and impossible to track. What to do? Renowned author, clean-up guru and Netflix sensation Marie Kondo has America cleaning up its collective room. But some of her same Japanese tidying lessons can also be applied to investors hoping to reach financial zen.

Two legs, a cleaning bucket in front of a messy room

Image Source: Getty Images

When cleaning your house, Kondo famously advises that you toss items that no longer spark joy for you. "A dramatic reorganization of the home causes correspondingly dramatic changes in lifestyle and perspective," she writes in The Life-Changing Magic of Tidying Up. "It is life transforming."

The same applies with portfolios. In fact, I'd suggest that cleaning up a chaotic portfolio can be just as rewarding as organizing your home. A well-organized portfolio filled with carefully chosen investments held in proper accounts can boost results, lower costs, and help you stay focused on your long-term goals. Just a few moments spent tidying and simplifying your portfolio can quickly pay off. Below are some ways you can apply the current tidying-up trend to your investments.

1. Clear out the junk

Take a look at your entire financial picture. Is it filled with shares of dozens of companies in the same industry or with similar market values, funds that own the same types of investments, or losers that are unlikely to come back (or are completely worthless)? Do you simply have too many stocks -- more than any one person can monitor? You might be a financial hoarder.

How many investments should you have? That really depends on your investment strategy. But if your portfolio is filled with dozens of individual investments you've added over time without reevaluating, there's a good chance your strategy is unfocused. Don't tell yourself that your financial situation is so advanced you must own 50 stocks. Consider that Berkshire Hathaway's $170 billion public portfolio holds just 15 primary investments. Academic research regarding how many stocks you need to be diversified is all over the place, with most saying around 10 to 15 is more than enough. Thanks to low-cost funds that diversify you with a single trade, the number of investments you need is likely smaller still.

Rather than getting hung up on the number, look at the types of investments you own. You don't need three funds that track large U.S. stocks; get rid of two of them and make sure you're diversified in other areas. You'll want to be exposed to large U.S. companies, small U.S. companies, international companies, emerging markets, and real-estate investment trusts. This doesn't mean you need a load of new stocks -- you can just as easily choose a handful of funds.

Still holding a bunch of losing stocks? It's likely time to part ways. That's especially true if you own shares of companies that were delisted from an exchange. Selling stocks that aren't working can dampen the pain by generating capital losses to offset any realized gains. Have more losses than gains in a tax year? That's even better: The capital losses can offset up to $3,000 a year in income. If you have more than that in losses, you can carry them over until you use them up.

What if you still think the stock can recover? You can always buy it back. Just make sure you wait more than 30 days, or the Internal Revenue Service won't let you write off the loss.

2. Consolidate accounts

Kondo urges people to store similar objects together in their homes to stay organized. Rather than scattering books here and there, keep them in the same place. "The reason every item must have a designated place is because the existence of an item without a home multiplies the chances that your space will become cluttered again," Kondo writes.

The same goes for your financial accounts.

How do you know if you're financially scattered? If you're not able to pull up a complete picture of your financial house in a minute or two, you may have too many accounts, or a poor handle on them. Too many accounts makes it hard to track your investment results, which is a problem, since you won't know if your strategy is working or not. Nearly 20% of Americans have relationships with three or more banks, says GOBankingRates.com. On top of that, Americans average 3.1 credit cards, and many have various brokerage accounts and retirement accounts as well, so things can become a mess.

If you're able to consolidate, there are advantages. Many banks and brokerages will give you a break on fees -- such as offering discounted or free trading commissions -- if you hold certain levels of assets with them. It's easier to track your money, too, if you keep it in fewer places.

If having multiple accounts is unavoidable, know what kinds of investments belong in each one. Your 401(k)s can be a great place to hold your bond portfolios, for instance: Putting bonds in a 401(k) allows the significant dividends they generate to accumulate tax-deferred. If you put bonds in a taxable account instead, the dividends would be taxed annually. Conversely, holdings in U.S. stocks can work well in a taxable account, since the dividends typically qualify for the dividend tax rate, which is usually much lower than your ordinary tax rate.

There are other considerations when consolidating accounts. The FDIC (Federal Deposit Insurance Corp.) will insure bank accounts up to $250,000, so exceeding that raises your risk. For brokerage accounts, coverage by the SIPC (Securities Investor Protection Corp.) stops at $500,000, of which only $250,000 can be in cash. Some brokerages, though, offer private insurance above SIPC limits.

3. Get rid of paper statements

Paper is the enemy of tidiness. Kondo's rule of thumb on papers is "discard everything." Of course, some papers are needed. "I recommend you dispose of anything that does not fall into one of three categories: currently in use, needed for a limited period of time, or must be kept indefinitely."

Most brokerage firms will allow you to access papers online. Not only is that tidier, but it's also more secure. Also, software like Quicken and online services like Personal Capital and Intuit's (INTU 0.18%) Mint are much better than paper at pulling together all of your accounts, so you can see how much you have.

And if that doesn't spark joy, I don't know what will.

Check out the latest earnings call transcript for Intuit.