Investors may not always know when to review their accounts or even what to look for when they do review them.

Retirement experts say that you should review your Individual Retirement Accounts and your 401k investments once a year. Some say that reviewing your investment accounts more than once a year is over-kill.

If you review your 401k investments and your Individual Retirement Accounts once a year, you will be able to monitor the trends, the market swings plus any expense changes.   If you review more often than that those key indicators will be too short of a time period to have any value or meaning for you.  You may even be able to retire early if you monitor and adjust accordingly.

So now that you will review your retirement investment accounts once a year, exactly what should you review? Let’s talk about that.

Your Individual Retirement Accounts & 401k Investments in review:

Review your investment returns:

• You would be an abnormal investor if you did not want high investment returns.
• Compare your investment returns with the returns of the last year, prior 3 year, 5 year and 10 years.
• If the entire market is in a slump and negative returns are currently the norm, if your investments are showing negative returns also, you are right in line with market conditions.
  
• So in addition to investment returns, here is some other criteria to evaluate your investments’ performance.
  

Review other criteria in addition to investment returns:

• The market sector your investment is in.
  
• Market sectors can include: technology, financials, healthcare, energy, telecommunications, industrials.
  
• If the market sector that you are invested in is growing and your personal investment within the same market sector is not – you may want to reevaluate.
  

• The highest concentration of holdings which means the top 10 – 15 companies your investment is in.
• If you are weighed too heavily in one investment, you may need to reevaluate.
• You want a balanced portfolio, and if your investments are over concentrated in one area, the portfolio is not balanced.

• Risk level, which is determined by the concentration of holdings.

• The investment strategy.   This is the way in which a mutual fund plans on meeting its investment objective.   Sometimes the fund objective could be to provide investors growth or capital appreciation or a steady income stream.    The strategy gets the fund there.

Evaluate Expenses:

• The professionals who manage your 401k investments & individual retirement accounts  charge fees for their services; they don’t work for free.
• Don’t be afraid of fees.
• Fees are fine; just make sure they are not excessive.
• If your investments are in stocks, there may be an account management fee.
• If you own mutual funds, there may be fees charged by the mutual fund company, plus an account management fee.
• If your investments are in 401k plans or IRA’s, the fees may be lower.
• Companies will show you their fees, you just have to ask.
• Fees are always listed in an investment prospectus.
• Every mutual fund has to put out a prospectus.
• You can usually find the fund’s prospectus on the mutual funds website.

Review your portfolio diversification:

• Review your asset allocations on an annual basis.
• You are reviewing your combination of stock investments, fixed income or bonds and cash or money market accounts.
• With a turbulent market your diversification may become skewed so you may need to rebalance the account once a year.
• Rebalancing is a function of keeping your investment mix or combination the same.
• Some investment accounts allow you to set up an automatic rebalancing feature; check with your financial adviser.

The money you invest into your Individual Retirement Account and 401k investments should grow over time and get you ready for retirement.   You should review your investments on an annual basis.

The investment returns,  market sector, concentration of holdings, risk level, investment strategy and expenses are all important criteria to consider when you review your Individual Retirement Account and 401k investment.

To get yourself ready for retirement you need to have the proper diversification and rebalancing, manageable expenses and steady investment returns.   Your annual review will keep your investments on track.

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