Cleaning up a portfolio is in many ways like emptying an attic or a cluttered closet. You mostly know what’s there and why, there’s a lot that you want to keep, and you don’t really notice the mess — or have to deal with it — when the door is closed and you can’t see it.
But cleaning up a portfolio can save money, improve investment returns, simplify tax recording and reporting, and make life easier on family members who may need to someday help you manage and/or inherit your money.
Since you’re setting aside investment performance for another day, look instead at your tiniest holdings and ask why they’re not a bigger part of your life.
It might be a few dozen shares of a stock spun-off from one of your core holdings, or the mutual fund, direct-purchase stock or other investment that you bought years ago thinking you would add to your holdings only to stop deposits when performance was lackluster.
It also could be any security that you have mostly lost interest in or that is now trivial in the scope of your holdings. Or, as in my recent case, it was the same security held in two accounts.
These are easy decisions.
Consolidating holdings these days is simple, usually involving a transfer request made online with the institution that is getting the money. That firm should be able to pluck the securities you specify and move them — or absorb the entire account — in a matter of days and without the pile of paperwork.