Ongoing Portfolio Maintenance

Here we are going to provide some notes that apply to portfolios of all sizes. Since they don’t neatly fall into unique categories, we’re just going to lump them all under “ongoing portfolio maintenance.” These are tips to help you monitor and control your portfolio of investments after you have established your initial investment allocations with your discount provider.

Continued deposits:

You aren’t done if you have just set up your online accounts and invested them appropriately with the money you have right now. You must begin early and keep saving and investing at all times if you want to continue to build the size of your portfolio! The best way to do this is to make it automatic so you don’t have to think about it. Set a recurring draft from your checking account to your brokerage account each month to make the process automatic. Then go invest those funds in your brokerage account as deposits and investment income build up your cash balances.

Monthly statements:

Read your statements that will come monthly from your broker. Sign up for online delivery of these statements and all other forms of communication (trade confirmations and company annual report deliveries) since the amount of paper used in these mailings is beyond excessive. Plus, some online providers will actually charge you if you choose paper delivery. Stay informed with how your investments are doing by reading these statements.


Over time certain investments will outperform others, and eventually your portfolio will have different weights assigned to the stocks/ETFs you initially purchased. In our previous example of a fictional $10,000 portfolio, for example, say over a year your emerging market funds greatly outperformed your other funds and your portfolio now has a 20% weight to the emerging fund instead of the original 10%. This would be a great time to sell some shares and spread that money into the U.S. index and the other foreign developed nation index that may have recently underperformed.

Or if you hold a portfolio of stocks and after a year one stock now holds a 7% position – it might be wise to sell 25-30% of that investment and buy shares of a company whose price has underperformed (yet still has promising long-term growth prospects).

By occasionally selling portions of your best performers and redistributing that money into other investments you are following the “buy low, sell high” mantra in a great way. The important thing to remember, however, is that you don’t want to rebalance your investments often since you will increase your trading costs and you will face higher tax rates if you sell your investments you have held less than a year. Federal taxes due on the gain when you sell a stock within a year of your purchase date are calculated based on your marginal tax rate (ranging from 10 to 37%), while federal taxes due on realized gains when you sell a stock you have held for more than a year are assessed at long-term capital gains rates of between 0 and 23.8% (as of the 2020 tax code).

Short-term trading and market timing in your account:

Avoid it. We’ve covered this before, but wanted to re-emphasize this point. Media outlets like CNBC will try to fill their full day news blocks with information that they suggest should make you, the individual investor, modify your investment strategy. Of course, if they said “this news is good to know, but it really doesn’t affect your investment strategy and it requires no action from you”… then viewers would probably tune out.

If you do not have the time or interest in ongoing account maintenance then you can consider working with a “Robo-Advisor” like Wealthfront or Betterment that can automate a lot of the rebalancing and investing options for you at a small fee. It is important, however, to make sure that your investments targeted for long time frames are allocated to 100% equities. These providers will gather data from you electronically and make investment recommendations that may be too conservative. This could result in lower returns over long time frames relative to an all equities portfolio.

Set a solid investment allocation that fits your goals, continue to add to your investments through monthly deposits, rebalance your investments on occasion, but do no more than this. Keeping your portfolio stable and boring is likely the best option for young professional investors.