3 Questions I Ask Myself When Reviewing My Investments

Here are the items I like to tackle when checking out my portfolio.

Investing your money is a great way to grow it into a larger sum. Now to be clear, before you open a brokerage account, you should make sure to have a healthy emergency fund in cash. That way, if unplanned bills strike, you'll have money in your savings account to fall back on.

Since I completed my emergency fund quite some time ago, I've been able to fund my brokerage account since and load up on different investments that I hope will serve me well over time. But tempting as it is to check on those investments often, I actually make a point to not check my brokerage account balance every day.

I have a lot of my money invested in stocks, and the stock market can be very volatile. And even though I've been investing for years, it can be unsettling to see your portfolio value jump around so much, sometimes even from one day to the next.

That's why I prefer to review my investments on a quarterly basis. And when I do, here are three essential questions I like to run through.

1. Is my portfolio's performance matching or surpassing that of the broad market?

When the stock market is down on a whole, I expect my portfolio to follow suit. And when the stock market is doing well, I expect a reasonably similar performance in my brokerage account. If that's something I don't see, then it's usually a wakeup call to make some changes.

Most of the time, I find that my portfolio moves with the broad market. That's because I own stocks across a wide range of market segments. Sometimes, I'll have a few stocks that aren't performing well. But since that's two or three out of dozens, it usually doesn't have such a drastic impact on my portfolio on a whole.

2. Is my investment mix as diverse as I'd like it to be?

One of my goals as an investor is to maintain a diverse mix of assets, and within each asset class, I like to uphold that practice, too. As mentioned, I own stocks across numerous market sectors.

But sometimes, stock values can change to the point where they cause you to be disproportionately invested in a single market segment. And so that's something I like to check for.

As an example, say you own 15 different stocks, three of which are tech stocks. It may be the case that those three stocks comprise 20% of your portfolio's value at one point. But if those stocks gain value, they might grow to comprise 45% of your portfolio's value.

Now the fact that those stocks gained value isn't necessarily a bad thing. But it also means that you're now not as diversified as you thought you were. In that case, some rebalancing may be in order. That could mean selling some shares of tech stocks and buying shares of stocks from other market segments.

3. Am I ready to take on more risk?

This is actually a newer question I've added to my list over the past year. Since I own lots of stocks, which are considered somewhat risky, I don't think my portfolio is too conservative given my age. But one thing I have been contemplating recently is whether I'm ready to own cryptocurrency, which I consider to be way more risky than stocks.

Stocks are something I'm used to researching and owning, whereas I'll admit that I'm not very well-versed in the crypto market. I'm also not convinced cryptocurrency is a suitable investment for me. But still, I figure it pays to ask the question and see where it takes me.

Investing money you don't need to use in the near term could make you wealthy in the long term. But your portfolio isn't something you should set and forget, so schedule some time every few months to check on your investments. And consider running through these questions when you do those reviews.