Why and when to review your investments

A portfolio review means looking at what you own — stocks, bonds, mutual funds, retirement accounts — and checking whether it still matches your goals and your life. You do not need much money to benefit from this. Even small portfolios drift over time: one investment grows faster than others, your risk tolerance changes, or your timeline to retirement shifts. A yearly review catches these shifts before they cost you.

The trigger for a review is often life change: a job loss, a raise, a child born, a major expense coming up, or simply reaching the date you set last year. If you have not looked at your investments in over a year, or if something major happened in your finances, a review is overdue. You do not need a financial advisor to do this — you can walk through it yourself using your account statements and a simple spreadsheet.

Key Takeaways

  • A portfolio review means comparing what you own against your original plan and your current life situation, and it takes an hour or two once a year.
  • On a lower income, focus first on whether you are still on track for your goal — retirement, a down payment, an emergency fund — not on beating the market.
  • Rebalancing means selling some of what grew too large and buying more of what fell behind, which keeps your risk level steady without adding new money.
  • Adjustments to a lower-income portfolio often mean cutting fees, moving money to tax-advantaged accounts, or pausing contributions temporarily during hardship.
  • You can do a basic review yourself using account statements; professional help is worth considering only if your portfolio is over $50,000 or your situation is complex.

Gathering your statements and setting your baseline

Start by collecting every investment statement you have: retirement accounts (401k, IRA, Roth IRA), brokerage accounts, savings accounts earning interest, and any employer stock plans. Write down the balance in each one and the date. This is your baseline — the snapshot of where you stand right now.

Next, find your original investment plan. If you wrote one down when you opened the account, use that. If not, look at your account's default settings or prospectus — the document that came with the account explaining what it invests in. Write down what you originally intended: the mix of stocks versus bonds, the time horizon (how many years until you need the money), and your goal (the dollar amount you are aiming for). If you cannot find this, write down what you think you intended based on your current account holdings.

Then calculate what percentage of your total portfolio each investment represents. If you have $2,000 in a stock fund and $8,000 in a bond fund, the stock fund is 20 percent and the bond fund is 80 percent. This percentage breakdown is your asset allocation — it is the single biggest driver of whether your portfolio matches your risk tolerance and your timeline.

Comparing your actual holdings to your plan

Now compare what you own to what you intended to own. If your plan was 60 percent stocks and 40 percent bonds, but you now hold 70 percent stocks and 30 percent bonds, your portfolio has drifted. This usually happens because stocks grow faster than bonds, so over time they take up a larger share. That drift is normal, but it means you are taking more risk than you planned.

Check whether that drift still makes sense for your situation. If you are five years away from needing the money and you are now holding more stocks than planned, that is a problem — a market downturn could hit right before you need it. If you are 30 years away and stocks have grown, that might be fine; you have time to recover. The key question is: does your current allocation still match your timeline and your comfort with loss?

Also look at the fees you are paying. On a lower income, fees matter more because they eat a larger percentage of your returns. Check whether you are in high-cost funds (expense ratios above 0.5 percent) when lower-cost options exist. A fund charging 1 percent per year costs you $100 annually on a $10,000 balance — money that could have grown instead. If you find high-cost funds, note them as candidates for replacement.

Rebalancing without adding new money

Rebalancing means selling some of what grew too large and using the proceeds to buy more of what fell behind. This brings your allocation back to your target without requiring you to add new money — which matters when your income is tight.

Here is a simple example: you planned 60 percent stocks, 40 percent bonds. Stocks grew, so you now hold 70 percent stocks, 30 percent bonds. You have $10,000 total. Your target is $6,000 in stocks and $4,000 in bonds. You currently hold $7,000 in stocks and $3,000 in bonds. You sell $1,000 of stocks and buy $1,000 of bonds. Now you are back to your target, and you did not spend any new money.

On a lower income, rebalancing is especially useful because it forces you to "sell high and buy low" — the opposite of what most people do. When stocks are up, you sell some. When bonds are down, you buy more. Over time, this discipline tends to improve returns without requiring you to time the market or add money you do not have.

One caution: if your investments are in a taxable brokerage account (not a retirement account), selling can trigger capital gains tax. If you have gains, you may owe tax on them. Retirement accounts like IRAs and 401ks do not have this problem — you can rebalance inside them without tax consequences. If you are in a taxable account and rebalancing would create a large tax bill, consider rebalancing slowly over several months, or rebalancing only new contributions.

Adjusting contributions and timelines on a tight budget

During a review, check whether your contribution plan still works. If you planned to add $200 a month but you have lost income or faced an unexpected expense, that plan may not be realistic. On a lower income, it is better to pause contributions temporarily than to stop investing altogether or to strain your budget.

If you need to cut back, decide whether to reduce the amount you contribute each month or to pause for a few months and resume later. Both are valid. A pause is often smarter than a permanent cut because it signals that the reduction is temporary — you are protecting your emergency fund or paying down debt, and you will resume when you can. Write down when you plan to resume and check it during your next review.

Also revisit your timeline. If you originally planned to retire at 65 but you are now behind on savings, you might adjust to 67 or 68. That extra time makes a real difference: a portfolio has more years to grow, and you have more years to contribute. If your timeline has moved, adjust your asset allocation to match. If you now have 10 extra years, you can afford to hold more stocks, which historically grow faster over long periods.

Cutting fees and moving money to tax-advantaged accounts

One of the highest-return moves on a lower income is simply cutting fees. If you are paying 1 percent per year in fees and you could pay 0.1 percent instead, that 0.9 percent difference compounds over decades. On a $10,000 balance over 20 years, that difference is roughly $2,000 to $3,000 in lost growth.

Look for low-cost index funds or exchange-traded funds (ETFs) that track broad market indexes. A fund tracking the S&P 500 or the total U.S. stock market typically costs 0.03 to 0.10 percent per year. Target-date funds — funds that automatically adjust from stocks to bonds as you age — often cost 0.10 to 0.20 percent. These are dramatically cheaper than actively managed funds, which often cost 0.5 to 1.5 percent or more.

Also check whether you are using tax-advantaged accounts fully. If your employer offers a 401k match and you are not contributing enough to get it, that is assistance programs you are leaving on the table. A 401k match is an immediate 50 to 100 percent return on your contribution — nothing in the market beats that. If you have room in an IRA (the contribution limit is $7,000 per year for 2024, though this changes annually), prioritize that over a taxable brokerage account because the tax savings compound over time.

When to seek professional help

You can do a basic review yourself using your statements and a spreadsheet. But if your situation is complex — you have inherited money, you own a business, you have significant debt, or your portfolio is over $50,000 — professional guidance may be worth the cost.

If you do seek help, look for a fee-only fiduciary advisor. "Fee-only" means they charge you directly (hourly, flat fee, or percentage of assets) rather than earning commissions on products they sell you. "Fiduciary" means they are legally required to act in your best interest, not their own. Many advisors will do a one-time portfolio review for $500 to $2,000, which can be worth it if it saves you thousands in fees or helps you avoid a costly mistake.

Avoid advisors who work on commission or who push you to buy products. On a lower income, you do not have money to waste on sales pitches. A good advisor should explain their reasoning in plain language and should be comfortable with low-cost index funds.

Frequently Asked Questions

How often should I review my portfolio?

Once a year is standard. Pick a date — your birthday, New Year's Day, or the anniversary of when you opened the account — and review on that date. If something major happens (job loss, inheritance, major expense), review sooner. If nothing has changed and you are on track, a quick 15-minute check is enough.

What if my portfolio lost money since last year?

Market downturns happen. Check whether your allocation still matches your timeline. If you are still years away from needing the money, a loss is temporary — you have time to recover. If you are close to needing it and you lost money, that is a sign your allocation was too aggressive. Adjust toward more bonds or stable investments going forward.

Should I sell investments that are losing money?

Not automatically. Selling locks in the loss. If an investment is losing money because the market is down, holding it gives it time to recover. If it is losing money because it is a bad investment (high fees, poor performance over years), selling and moving to something better makes sense. Look at the reason for the loss, not just the number.

Can I rebalance if I only have a small amount invested?

Yes, but watch transaction costs. If you have $2,000 and you pay $10 per trade, rebalancing costs 1 percent of your portfolio — that is expensive. Many brokers now offer commission-free trading, which makes rebalancing cheap even on small amounts. Check your broker's fees before you rebalance.

What if I cannot afford to invest right now?

Pause contributions, but do not sell. Keep what you have invested so it can grow. When your income improves, resume contributions. A portfolio that sits still still grows; one that you sell out of loses that growth forever. If you need the money for an emergency, that is different — but if you are just cutting back temporarily, hold what you have.