Diversification is a staple concept in investing, but only those who follow the advice to do it know how confusing it can be. When you have dozens of investments in a variety of areas, you can start to feel as if you have very poor control over your portfolio.
Between all the documentation and unique accounts, it’s so easy to get confused.
Stay Organized With These Helpful Pointers
Some people are very systematic in how they approach their portfolio, while others tend to throw everything into a messy pile and leave it be. The problem is that you can’t be a successful investor if you don’t develop a system for staying organized.
So whether you’re naturally disciplined or innately messy, the pointers below should at least help you get started.
- Have an Intake System On Your Desk
Organization starts from the first instant you receive a document, statement, or another piece of financial information (digitally or on paper). That means you need an intake system that gets you off on the correct foot.
When you receive information digitally — such as through one of your online accounts or email — you should make a copy immediately and place it in the appropriate desktop folder. When you receive information physically, it’s smart to create a desktop folder/box system.
One box should be for documents you’ve opened but need to deal with before filing away. Another should be for documents that have been received but have yet to be opened. A final box should be for documents that are ready for shredding. A system like this ensures that nothing will slip through the cracks.
- Consolidate the Vital Details
Much of the financial files and other information you collect is nothing more than clutter. It can be helpful to use custom templates and forms from a website like Hloom to consolidate information for quick access at a later date.
For example, let’s say you receive monthly statements from a growth stock mutual fund you’re heavily invested in. Rather than save all five or six pages they sent you, you can copy down the vital details in a spreadsheet and stash the other papers in a box that will be shredded at the end of the year (after your annual statement arrives).
This cuts down on the clutter and provides you with easy access to the information you may need.
- Digitize Everything for Convenience
There’s nothing inherently wrong with maintaining paper records and storing the files and statements in a filing cabinet nowadays, but be careful not to make this your primary organization system. All it takes is a fire, flood, or theft to leave you with nothing.
The much wiser strategy is to scan documents into your computer and save them on the Cloud. This backs up your files and ensures you have access to them no matter where you are.
- Keep Your Spouse Informed
Are you the one who handles all the finances and investments in your household? If so, just because you take the lead, that doesn’t mean you should do it on your own. Always keep your spouse abreast of what’s happening and where records are stored, just in case something should happen to you.
Organization is Half of Success
Though it’s probably not been statistically proven, most seasoned investors would agree with the notion that organization is half of success. It’s impossible to make educated decisions without having everything ordered in a manner that makes the details easy to locate in a timely manner.
Before you proceed any further, make sure you’re on top of your paper trail. If nothing else, you’ll feel a lot better about where you are financially when your head hits the pillow every night.