The beginning of the year is always a good time to check your finances and make any adjustments or changes if necessary. And that’s exactly what I have been doing over the past few weeks. Here’s a closer look at what I’ve done to get my retirement savings in order.
Consolidated balance sheet
One thing that was frustrating me about my retirement savings was that my money was spread out over many different accounts. For example, I have a self-invested personal pension (SIPP), a stocks and shares ISA, a lifetime ISA, a short-term trading account, and a few different cash savings accounts. The same goes for my wife, whose investments are spread out over many different accounts and providers too. This was causing a problem for two main reasons. First, with so many different accounts, it was hard to determine the overall amount of our retirement savings. Second, it was also hard to get a reading on the overall asset allocation.
So, what I did to sort this issue out was put together a consolidated balance sheet in a spreadsheet that lists every account and breaks it down by asset allocation (i.e. UK stocks, global stocks, dividend stocks, small-cap stocks, cash). With the spreadsheet in place I can now keep track of our total retirement savings easily and I can also clearly see the asset allocation.
Asset allocation
Being able to see the asset allocation clearly makes it a lot easier to make effective asset allocation decisions. Overall, I was fairly happy with the current situation (it’s around 50% UK equities, 40% global equities and 10% cash) although one area I realised we had very little exposure to was UK mid-cap (FTSE 250) stocks. This is an area of the market that has historically generated excellent long-term returns, so I’ll be looking to deploy a little bit of capital into this area at some stage in the near future.
Fund monitoring
The next thing I did was assess all the funds that we hold to see if they’re still appropriate holdings. I checked performance over a medium-to-long-term horizon, top holdings, and also fees. The result? Some funds had to go.
A few funds had underperformed the market significantly, which was disappointing, while others were charging fees that were too high. So I made a few switches, moving some money into more cost-efficient active funds with better long-term performance track records and some into passive index trackers in order to bring our fees right down.
Stock monitoring
Finally, I looked at our individual stock holdings to make sure I was still comfortable holding each stock and whether the portfolio needed rebalancing at all. In the end, I didn’t make any changes here. A number of stocks underperformed last year, but investing is a long-term game, so I’m happy to give these stocks more time to fulfil their potential.
