Part 1: Bringing Order to Your Investments

Hi Reader,

Today I'm sharing part one of a three-part series on investing.

(I'm also sharing a free PDF checklist at the end: "What Issues to Consider When Reviewing Your Investments")

This series will walk you through how to transition from a chaotic collection of assets into a well-structured investment portfolio.

Each part will explore the separate planning pieces involved in minimizing the taxable impact of a desired transition...

...while successfully moving toward a more orderly portfolio.

Part One: The Beauty of Being Organized

When it comes to investing, my message has long been loud and clear:

Build a well-structured portfolio to maximize returns while mitigating taxes and managing risk.

💥 Shape it to meet your unique needs, goals, and desires.

💥 Keep a lid on the costs.

💥 Stay on target over time (i.e., avoid making irrational changes).

But...

...what if you’ve been investing for a while and don’t yet have that well-structured portfolio?

It stands to reason:

The more wealth you accumulate, the more chaotic your assets and accounts can become.

What begins as a manageable assortment (hopefully) grows.

That’s a good “problem” to have, but the sheer volume can eventually overwhelm your organizational efforts.

Then what?

Fortunately, it’s never too late to bring order to your investment universe.

In this first installment in my three-part series, I'm providing some sensible solutions to this perennial challenge.

Specifically, I'm sharing the initial steps you can take to move from random results to a more organized approach.

Step #1: Take Stock of What You’ve Got

The best way to get started is to determine where you stand today.

What do you currently own?

Where are you holding it, and why?

⭐️ Bonus points if you can determine how much your current holdings are costing you in both transparent AND hidden fees.

Step #2: Decide Where You’d Like To Go

Next, it’s time to plan (and document!) what your orderly investment universe looks like, and how you expect to get there.

Having a plan in place can feel incredibly empowering if your investments have gotten out of hand.

You can stop taking potshots at your wealth and begin aiming at your unique, personal targets.

Strategy:

What return do you need to reach your goals, and how much risk are you willing to take to achieve them?
Do you have the time and temerity to take on more investment risk to achieve higher returns?
Or are you better served with a more modest approach (i.e., less “exciting” but less likely to fall apart in a pinch)?

Target:

If you could start with a clean slate for creating your “perfect” investment portfolio, what would that look like?
How much in stocks vs. bonds, international vs. domestic, small cap vs. large cap?
What are the best asset classes and securities to invest in to achieve your desired goal?

Tactics:

Which of your current investments no longer make sense for your plans?
Which might be replaced with better-managed, lower-cost equivalents?
What pieces are missing from your portfolio?

Step #3: Proceed as Planned

If you’ve accumulated a vast clutter of capital, you’re likely to want to do some remodeling:

Selling unnecessary (or overpriced) positions, buying others that are a better fit, and streamlining duplicate assets and accounts.

In a tax-free world, you could proceed at full speed.

But in many cases, when you sell positions for more than you paid for them, there can be a tax consequence.

And blindly triggering additional taxes could bump you into a higher tax bracket, increasing your tax rates across a wider swath of your total annual income.

How do you pursue a tidy transition, given the challenges involved?

I'll be sharing more in Part 2 ("Transitions and Taxes") next week!

In the meantime, grab my freshly updated checklist:

👉 What Issues to Consider When Reviewing Your Investments