We are at the end of fall and have our hands full of routine tasks such as to prepare for the coming winter. If you have a car, you are so ready to change tires and also, most likely, to ask your mechanic to ensure it is ready to face the cold season.
Your portfolio also needs regular attention and approach, and the end of the year is a good time to do so. By the way, do not fall into the trap of obsessive attention, indulging your temptation to change everything in your wallet every month or every week, according to your emotional responses. After all, you do not have your car checked up every week, even if you have a “bucket”!
That said, there still should be an update on the financial situation in general and your particular portfolio to at least make sure that you are always en route to achieve your long-term goals.
The first thing to do is calculate your gains and losses in your taxable accounts. This is what is easier, because you only have to make a list of your transactions of the year. If you have a significant gain, you should take a critical look at your losing stocks in order to sell to at least reduce or eliminate your taxable gain.
The goal is not only to reduce your tax bill, but also improve your portfolio. I can tell you that the biggest mistake of investors is to fall in love with their losers, keeping them year after year while they are so quick to sell to pocket at least a small gain.
As long as you do the work, do it also for your RRSP and TFSA. If actually realize that because of your desire to minimize taxable gains, you are much more disciplined to identify the losers in your taxable accounts, it is a big mistake, because it is crucial to eliminate losers securities, regardless of the type of account.
The second stage
The other big goal of your annual maintenance you should think about is your weight and your diversification. A good investor shared his investment approach which includes among other things its diversification for fee scales, such as the maximum percentage that it is ready to have a basis in an asset class (stocks, bonds, etc.) in a particular market (US, European, international securities, etc.).
For example, if you have decided that you do not want to have more than 10% of your capital in one way and you exceed this level, it is important to sell some of your shares. You may make less money long term, but you will sleep better.
Do not be influenced by the market, the fashions of the day and what everyone says. These rules are personal, each with a different risk tolerance.
In summary, your portfolio needs some monitoring, regular, but no more. Do it in a serious and disciplined way. Those few minutes will earn you big money.