Why Now Is a Good Time To Reassess Your Investments

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While there’s never really a bad time to reassess your investments, a number of factors make now a particularly good time for a financial review. Even if you took a look at your financial situation at year-end 2020, a lot has happened that could affect your overall financial picture. In both the short term and the near term, various factors exist in the marketplace and the economy as a whole that can impact your investments. Here are just a few of the reasons why now is a good time to take a closer look at your portfolio and possibly make some adjustments.

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The Stock Market Is at All-Time Highs

When the stock market makes all-time highs, it’s not always a bad sign. In fact, new highs often lead to additional highs in short order. However, in addition to being at an all-time high, by some valuation measures, the market is also at one of its most expensive levels in history. There are certainly factors supporting this type of valuation, including record-low interest rates, but at the same time, risks have increased. This doesn’t mean you should rush out and sell everything, but at the very least you should evaluate the amount of risk that currently exists in your portfolio.

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There’s a New Sheriff in Town

On Jan. 20, a new administration took over in Washington. As with any new administration, that means shifting priorities for the U.S. government. The portfolio that worked for you over the prior four years may not be well-suited for the next four. The good news is that the political goals of the Biden administration are clearly outlined. Infrastructure and clean energy have drawn the attention of the new president, and extensive stimulus is likely to be pumped into the economy. You should review your investments with these political priorities in mind.

Read: 13 Toxic Investments You Should Avoid

Your Portfolio Is Likely Out of Balance

In spite of all the turmoil, 2020 turned out to be a good year for the stock market. Overall, the S&P 500 index was up over 16%, but some well-known stocks were up over 100%, including Etsy, Nvidia, Paypal, L Brands and Tesla, which returned a whopping 743%. If you owned some of the most successful stocks of 2020 — or even if all of your money was in an S&P 500 index fund — check to make sure that your portfolio is still in line with your risk tolerance and your intended asset allocation.

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You Still Have Time To Make IRA Contributions

Tax time is just around the corner, and while there are many things you can’t change, you can still make deductible retirement plan contributions that you can count for tax year 2020. The IRS allows you to make contributions all the way up until the tax filing date, April 15, for the prior tax year. If you’re at least age 50, you can contribute an additional $1,000 to an IRA as a catch-up contribution.

Read: Retirement Planning Mistakes That Waste Your Money

You May Get Additional Stimulus Funding

From all indications, the new Biden administration is going to deliver additional $1,400 stimulus checks to qualifying Americans as soon as possible. Before your eyes start wandering to the new iPhone or TV you’ve been wanting to buy, take a look at your financial situation. If your retirement accounts are maxed out, you’ve got a five- or six-digit emergency fund and your kids’ college is fully funded, then perhaps you can consider indulging yourself with those stimulus checks. However, if you’re like most Americans, your retirement plan is underfunded, your kids’ college fund is coming up short and you might not even have an emergency fund. In this case, consider your stimulus payments as “found money.” Since you weren’t planning on getting that money in the first place, use it to shore up your finances rather than blow it on nonessential purchases. In the long run, you’ll thank yourself.

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Last updated: May 11, 2021

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About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.
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