Personal Finance A Midyear Portfolio Checkup

[BamaNation]

Christine Benz has a nice article on Morningstar.com on doing a mid-year portfolio checkup. We typically do something like this over the July 4 holiday each year and also during Christmas holiday.

Benz provides her guide in 7 steps which I've summarized and commented on here with some links to good resources for that step:

1. See how your doing on reaching your financial goals. Evaluate your plan. Put an Investment Policy Statement together if you don't have one. This will steer you when the market waters become rough!
2. Assess your asset allocation. Assessing your asset allocation is mostly based on your risk tolerance. Find an allocation that you can set and sleep well at night regardless of what the market is doing.
3. Assess adequacy of liquid reserves. Have a dedicated emergency fund. Then 3-6 mo of living expenses if you're still working or 6-12 months if you're retired. This way you can take care of A/C breakdowns, tire blowouts, etc. with the emergency fund and have enough to live on if you lose your job/get sick or if the market is volatile in your retirement.
4. Assess your equity positioning. Use Morningstar's style box in X-ray to evaluate if you're too heavy / light in one equity class or another. If you're in a total stock market index fund and aren't "tilted" toward small or growth or international then issue is less of a concern. However, if you're "tilted" one way or another then you'll want to make sure you get back in balance to whatever is stated in your plan.
5. Evaluate fixed-income exposures. What bonds / bond funds are you in? Are they high-quality & low cost? Don't take on unnecessary risk in a bond portfolio. Bonds should provide "ballast" and relatively stable returns.
6. Check up on your holdings. Look at your individual holdings. Read Morningstar's reviews for an overall understanding of what's going on with each fund. Don't worry about stars or star ratings.
7. Make changes judiciously. Changes should be made thoughtfully, carefully, and not hastily. Consider your life stage, how out of shape your overall portfolio has become, life situation changes, tax implications of changes, and transaction costs.

A Midyear Portfolio Checkup in 7 Steps

After the first-quarter market volatility, the time is right to see if any adjustments are in order.

www.morningstar.com

 

[B1GTide]

Christine Benz has a nice article on Morningstar.com on doing a mid-year portfolio checkup. We typically do something like this over the July 4 holiday each year and also during Christmas holiday.

Benz provides her guide in 7 steps which I've summarized and commented on here:

1. See how your doing on reaching your financial goals. Evaluate your plan. Put an Investment Policy Statement together if you don't have one. This will steer you when the market waters become rough!
2. Assess your asset allocation. This is mostly based on your risk tolerance. Find an allocation that you can set and sleep well at night regardless of what the market is doing.
3. Assess adequacy of liquid reserves. Have a dedicated emergency fund. Then 3-6 mo of living expenses if you're still working or 6-12 months if you're retired. This way you can take care of A/C breakdowns, tire blowouts, etc. with the emergency fund and have enough to live on if you lose your job/get sick or if the market is volatile in your retirement.
4. Assess your equity positioning. Use Morningstar's style box in X-ray to evaluate if you're too heavy / light in one equity class or another. If you're in a total stock market index fund and aren't "tilted" toward small or growth or international then issue is less of a concern. However, if you're "tilted" one way or another then you'll want to make sure you get back in balance to whatever is stated in your plan.
5. Evaluate fixed-income exposures. What bonds / bond funds are you in? Are they high-quality & low cost? Don't take on unnecessary risk in a bond portfolio. Bonds should provide "ballast" and relatively stable returns.
6. Check up on your holdings. Look at your individual holdings. Read Morningstar's reviews for an overall understanding of what's going on with each fund.
7. Make changes judiciously. Changes should be made thoughtfully, carefully, and not hastily. Consider your life stage, how out of shape your overall portfolio has become, life situation changes, tax implications of changes, and transaction costs.

A Midyear Portfolio Checkup in 7 Steps

After the first-quarter market volatility, the time is right to see if any adjustments are in order.

www.morningstar.com

Thank you.

And a reminder that if you are in a position to do these things, you are far more fortunate than the vast majority of your fellow Americans. Remember that and give thanks - and maybe give a little back.

 

[BamaNation]

Thank you.

And a reminder that if you are in a position to do these things, you are far more fortunate than the vast majority of your fellow Americans. Remember that and give thanks - and maybe give a little back.

Working hard / smart, not buying bling-bling, and saving and investing wisely dramatically increase the odds of being fortunate and being able to give back I aspire to be a philanthropist when I grow up

 

[GrayTide]

Thanks Brett. It was a lot easier when my wife and I were both working, but being on my own now and retired makes it kind of scary at times. I have made quite a few adjustments living alone, adjustments in consultation with my financial advisor.

 

[BamaNation]

Working hard / smart, not buying bling-bling, and saving and investing wisely dramatically increase the odds of being fortunate and being able to give back I aspire to be a philanthropist when I grow up

To further my thoughts on this subject and keeping it overly simplistic based on something I've heard Dave Ramsey talk about... allocate your income in the following manner:

• 1/3 for taxes
• 1/3 for expenses (including 5-10% for charitable contributions)
• 1/3 for investing & savings

Obviously the specifics of your life are going to modify these allocations, but if you're investing 1/3 of your income, you will most likely actually be able to retire fairly comfortably If you're giving at least 5-10% of your income to charitable entities that actually do good on your behalf, you're giving about 5-10X what the average person gives. Start out at 5-10% of net and try to move to 10% of gross as your income increases or you reduce expenses.

As for saving/investing, the earlier one starts, the better (and the less you have to save each month)

Here’s the breakdown of how much you have to save per month (at a 6% annual return) to have different savings (left column) by age 67 if you started at a certain age (top row):

6% Return	Age 20	30	40	50	60
$ 250,000	$ 80	$ 153	$ 310	$ 708	$ 2,402
$ 500,000	$ 160	$ 307	$ 620	$ 1,416	$ 4,804
$ 750,000	$ 239	$ 460	$ 930	$ 2,123	$ 7,206
$ 1,000,000	$ 319	$ 613	$ 1,240	$ 2,831	$ 9,609
$ 1,200,000	$ 383	$ 736	$ 1,488	$ 3,397	$ 11,530
$ 1,500,000	$ 479	$ 920	$ 1,860	$ 4,247	$ 14,413
$ 1,750,000	$ 559	$ 1,073	$ 2,170	$ 4,954	$ 16,815
$ 2,000,000	$ 639	$ 1,226	$ 2,480	$ 5,662	$ 19,217
$ 3,000,000	$ 958	$ 1,839	$ 3,720	$ 8,493	$ 28,826
$ 4,000,000	$ 1,277	$ 2,452	$ 4,959	$ 11,324	$ 38,434
$ 5,000,000	$ 1,596	$ 3,065	$ 6,199	$ 14,155	$ 48,043
$ 10,000,000	$ 3,193	$ 6,130	$ 12,399	$ 28,310	$ 96,086

For a more conservative estimate, here's the table above at a 4% return:

4% Return	20	30	40	50	60
$ 250,000	$ 151	$ 246	$ 430	$ 858	$ 2,584
$ 500,000	$ 301	$ 493	$ 859	$ 1,715	$ 5,168
$ 750,000	$ 452	$ 739	$ 1,289	$ 2,573	$ 7,752
$ 1,000,000	$ 602	$ 986	$ 1,719	$ 3,431	$ 10,335
$ 1,200,000	$ 723	$ 1,183	$ 2,062	$ 4,117	$ 12,403
$ 1,500,000	$ 904	$ 1,478	$ 2,578	$ 5,146	$ 15,503
$ 1,750,000	$ 1,054	$ 1,725	$ 3,008	$ 6,004	$ 18,087
$ 2,000,000	$ 1,205	$ 1,971	$ 3,437	$ 6,861	$ 20,671
$ 3,000,000	$ 1,807	$ 2,957	$ 5,156	$ 10,292	$ 31,006
$ 4,000,000	$ 2,410	$ 3,942	$ 6,875	$ 13,722	$ 41,342
$ 5,000,000	$ 3,012	$ 4,928	$ 8,594	$ 17,153	$ 51,677
$ 10,000,000	$ 6,024	$ 9,856	$ 17,187	$ 34,306	$ 103,355

 

[BamaNation]

Just wanted to bring this up again for a mid-year assessment for July 2025 since Christine Benz has refreshed her article on Morningstar.com on doing a mid-year portfolio checkup and I've updated my comments below as well. As always, Mrs. BN & I typically do something like this over the July 4 holiday each year and also during Christmas holidays.

Given the roller coaster of a year thus far, you may need to rebalance. This should help you understand what you need to do.

Benz provides her guide in 7 steps which I've summarized and commented on here with some links to good resources for that step:

1. Do a wellness check. Evaluate your plan. Put an Investment Policy Statement together if you don't have one. This will steer you when the market waters become rough!
2. Assess your asset allocation. Assessing your asset allocation is mostly based on your risk tolerance. Find an allocation that you can set and sleep well at night regardless of what the market is doing.
3. Assess adequacy of liquid reserves. Start or fully fund a dedicated emergency fund in a High-Yield Savings Account (HYSA) like at Ally or your credit union. This should be returning >3.5% interest as of June 2025. Start with having $1000, then get to 1 mo of living expenses. Then, over time, increase to 3-6 mo of living expenses if you're still working or 6-12 months if you're retired. This way you can take care of A/C breakdowns, tire blowouts, appliance breakdowns, car repairs, etc. with the emergency fund and have enough to live on if you lose your job/get sick or if the market is volatile in your retirement. One rule of thumb says that for every $10K of salary, save at least 1 month of net income in your emergency fund.
4. Assess your equity positioning. Use Morningstar's style box in X-ray to evaluate if you're too heavy / light in one equity class or another. If you're in a total stock market index fund and aren't "tilted" toward small or growth or international then issue is less of a concern. However, if you're "tilted" one way or another then you'll want to make sure you get back in balance to whatever is stated in your plan.
5. Evaluate fixed-income exposures. What bonds / bond funds are you in? Are they high-quality & low cost? Don't take on unnecessary risk in a bond portfolio. Bonds should provide "ballast" and relatively stable returns. You're not looking for a high return here. Bonds should typically be placed in your tax advantaged account (i.e. 401k) since you don't want to be taxed on the dividends each year while your highest growth fund (i.e. Total Stock Market Fund) should be in your Roth IRA if you have one.
6. Check up on your individual holdings. Look at your individual holdings. Read Morningstar's reviews for an overall understanding of what's going on with each fund. Don't worry about stars or star ratings - these are meaningless (for the most part). You should typically focus on expense ratios and get those as low as possible for each type of asset.
7. Make changes judiciously. Changes should be made thoughtfully, carefully, and not hastily. Consider your life stage, how out of shape your overall portfolio has become, life situation changes, tax implications of changes, and transaction costs. Bogleheads has several good, free, rebalancing and allocation spreadsheets (google & excel) for helping you with this.