Course 101: Steps to a Suitable Portfolio
Make Your Portfolio Fit Your Blueprint
In this course
1 Introduction
2 Create a Blueprint
3 Discover What You Already Own
4 Make Your Portfolio Fit Your Blueprint
5 Schedule a Time to Rebalance
6 Monitor Your Investments

Now that you know what you have, it's time to find out whether your current portfolio fits your blueprint.

Begin by checking your portfolio's asset allocation. If that doesn't match the asset allocation you laid out in your blueprint, shift assets among funds and stocks to tailor the mix. If your investments are in taxable accounts, however, you might not want to sell any of them--you may pay commissions to trade out of them, and you may also owe taxes if your funds or stocks have gained in value since you originally purchased them. We'll talk about sell strategies in Portfolio 304: Strategies for Selling.

Next, weed out redundant investments. If you have three large-cap growth funds, for example, they probably aren't all equally good. Refer to Morningstar.com's Fund Reports to see which fund has the lowest expenses and longest-tenured fund manager, as well as a strong long-term risk/reward profile. Morningstar.com Premium Members can also read the Morningstar Analysis for insight into the funds' strengths and weaknesses.

Be sure that your portfolio includes core holdings, those investments on which you're relying most to help you meet your goals. Core investments should be the biggest part of your portfolio. We'll discuss how to choose them in Portfolio 106: Core vs. Noncore Investments.

Finally, fill any portfolio holes, such as a lack of value or foreign exposure, with new investments.

Next: Schedule a Time to Rebalance >>


Search
Print Lesson |Feedback
Del.icio.us Del.icio.us | Digg! digg it
Learn how to invest like a pro with Morningstar’s Investment Workbooks (John Wiley & Sons, 2004, 2005), available at online bookstores.
Copyright 2015 Morningstar, Inc. All rights reserved. Please read our Privacy Policy.
If you have questions or comments please contact Morningstar.