Don’t be a dinosaur with your finances

If you like history, there are places in Connecticut that can take you back 200 million years.

I’m speaking of Dinosaur State Park in Rocky Hill and the West Hartford Children’s Museum, which has an exhibit, “Dinosaurs in your Backyard.” In both places you can see fossils, bones and footprints, and learn more than you can imagine about beasts that roamed Earth long before the first market correction.

Learning about history is enlightening. For investors, the history of a stock or even the market as a whole can be a terrific educator; yet, no matter how solid a trend may be, that history is no predictor of what will happen next. Unlike fossils, in the market nothing is set in stone.

There may be some fossils in your portfolio — stocks that at one time showed great promise and perhaps even performed well in their time. But is it still their time? We should never get complacent about modern-day investment fossils and where they may be lurking, especially in our portfolios.

If you’ve been keeping up with the markets you may have noticed that things are moving fast. If we are going to stay abreast of all the market fluctuations, news and geopolitical atmosphere, we can’t spend any time resting on our laurels.

For many investors, regular portfolio updates are as matter of fact as the Earth’s rotation. Some investors mark their calendars for when they examine their portfolios, including regular performance evaluations of its contents. It could be monthly, quarterly or on some other timeline, but the key issue is that it should be done.

One major question all investors face is whether and/or when to sell. Some analysts say we should never sell because most stocks that stay with the market are going to be producing at a higher rate than they did when we bought them. But that isn’t always the case. Frankly, there are just some stocks that underperform to such a degree that they hang around our portfolios to the point of extinction. These stocks, if sold at the right time, may be used to offset taxes from some other investments that are thriving.

In addition to questions of buying, selling and redistribution, there are some areas we may overlook because they have been around so long or represent such a small percentage of our portfolio that we have forgotten them. For instance, if you changed jobs several times early in your career but have low-balance 401(k) accounts hanging around from back then, it could be a good time to consider rolling them into an IRA.

Aside from the very real possibility of making your money work harder and smarter for you, there also are differing regulations for IRAs that could enable you to diversify with a larger selection of investments that may not be possible within the 401(k).

Dinosaurs ruled this earth for hundreds of millions of years longer than the total span of human existence, but they died off because they couldn’t adapt to a changing environment. With all that is changing in the world financial environment today, we must stay alert and learn to adapt. Think about getting professional advice before making any major moves, as laws and regulations affecting your plans can differ from state to state.

Valerie Dugan