How Do I Manage My Own Portfolio? 7 Steps to Start

Tyler Gardner (0:00)

Real wealth isn't about outsmarting the market. It's about outsmarting your own worst instincts. And the ultimate measure of a good portfolio isn't how it performs during a bull run, it's how well it lets you live the life you actually want. Because freedom isn't just about having money, it's being able to use it without delay, drama, or a fire sale on an arbitrary Tuesday.

Hello friends, this is Tyler Gardner welcoming you to another episode of Your Money Guide on the Side, where it is my job to simplify what seems complex, add nuance to what seems simple, and learn from and alongside some of the brightest minds in money, finance, and investing. So let's get started and get you one step closer to where you need to be. This week we're tackling one of the topics I used to get asked about more than any other. Right up there with Should I Buy Gold? And Is My Advisor Secretly Bad At This? We're talking about how to vet your own portfolio. Not how to invest, mind you. That's for another episode. This is more of a financial checkup, a pulse taking, a let's pop the hood and see if this thing is still running in the direction you want to go kind of conversation. And as always, limited jargon, no stock tips, just a clear headed look at where you are and whether it makes sense anymore. Or, if like that gym membership from 2014, it might just be time for a change. And before we get into it, I have one and only one weekly request from you. If this show has proved helpful to you in any way, I'd be incredibly grateful if you'd take a second to leave a review on Apple Podcasts or share it with someone who might need it. It really helps the show grow and reach more people, and I make every episode with one goal in mind to be of value to you. Not just today, but 10 years from now. So you can come back to it anytime and still get something useful, clear, and sometimes calm, no matter how much of a temper tantrum the market is throwing that day. So, let's begin the vetting process. And by show's end, you will have a list of the 7 steps to take to run a full sanity check portfolio audit at any time, regardless of how much you know, how much you have, or how much some screaming head is yelling at you to buy the dip before it's too late. Here are the 7 steps I would, and do, take to evaluate my own portfolio.

Number one, do you understand it? Aka, is this portfolio a golden retriever, or a pup that is lovingly referred to on adoption sites as mixed breed of unknown heritage? Before you do anything else with your portfolio or your finances ever, you need to start as simply as possible and ask yourself one and only one question. Do I know what I own? Not vaguely, not, I think there's a fidelity something or other in there, and maybe a target date thing that rhymes with man guard 2050 I mean, do you really know? Like you'd know the contents of your glove box if it held $300,000 in hard cash. Because the last thing you want is to find out you own the Donkle McFlonkerton Growth Fund from Gold, Stone, Rock, Pebble Advisors, and you have no idea what that fund actually invests in. Side note, if you do own that fund, I'll bet you a buck it's the S&P 500 with a heavier weighting in Apple and NVIDIA for 20 times the cost. Don't worry, I'll send you my Venmo later so you can all pay up when you check it out.

Most people I have connected with either in a professional capacity or in an off-the-cuff, hey Tyler, you seem to know about this stuff, so tell me what I'm doing wrong capacity, have no idea what they're invested in. I'm not kidding, I really wish I were. But my pseudoscience, anecdotally sound guesstimate, is that 95% of people have no idea what they own because it's either been handed to them by a partner, or a parent, or an advisor, or an HR department, or the media. So before you say, I'm diversified, when what you really mean is, I have a target date fund and an emotional support index fund, you need to peel back the label on some of these funds. Because what you will most likely find is the same 10 stocks, over and over and over again, dressed up in different prospectuses at different price points. So here's your first homework assignment. Take 10 minutes at some point today, and just look at each account. Your brokerage account, your 401k, your Roth IRA, maybe your HSA, and that forgotten rollover from your first job at Best Buy. And ask the following, what funds or stocks do I actually own? What do those names mean? The language I would Google here is the fund name and then top 10 holdings. You'll see what the fund is most heavily invested in. And again, surprise, you'll most likely notice it's all the same companies. And finally, could I explain this investment to a reasonably smart 12-year-old without breaking into a cold sweat? Because if you don't understand it, you're not going to trust it. And if you don't trust it, the second the market drops 20%, you're going to dump it like a bad Tinder date. I don't know, maybe ghost it. I guess that's probably a more fitting analogy these days. Remember, your portfolio isn't just a collection of tickers. It's a strategy. It's a story. And if the story makes no sense to you, do not be surprised when it doesn't end well.