Monitoring Your Fidelity Investment Plan: A Step-By-Step Guide

If you want to monitor your Fidelity investment plan, you can use the Full View® feature, which allows you to track your financial information, including income and expenses, in a simplified, modern, and user-friendly way. You can also use Fidelity's Planning and Guidance Center to create and monitor multiple independent financial goals. It is recommended that you check your investment plan periodically, especially if your goals or situation changes, or after sharp market moves, to ensure your investments are still aligned with your goals, investment horizon, financial situation, and risk tolerance.

Check your investment plan periodically

Checking your investment plan periodically is a crucial aspect of monitoring your Fidelity investment plan. While it is essential to review your plan regularly, there are specific times when it becomes even more critical to do so. Here are some key considerations for checking your investment plan periodically:

Timing of Reviews

Firstly, it is recommended to check your investment plan periodically, especially if your personal goals or situation changes, or after sharp market movements. These events can impact your investment strategy and the performance of your investments. By conducting a review, you can ensure that your investment plan remains aligned with your goals and risk tolerance.

Alignment with Goals

When reviewing your investment plan, it is important to assess whether your investments are still in line with your financial objectives. This includes considering your investment horizon, financial situation, and risk tolerance. If your investments deviate from your goals, it may be necessary to make adjustments to get back on track. Therefore, it is advisable to start with a clear plan and periodically evaluate whether your investments continue to support your objectives.

Asset Allocation

Over time, the relative market performance of different asset classes can cause your investment mix to drift away from your original plan. For example, you may end up with a higher proportion of stocks than intended, increasing your risk exposure. Alternatively, you may have too little risk, potentially sacrificing growth potential. Therefore, it is crucial to periodically review and adjust your asset allocation to ensure it aligns with your risk tolerance, financial situation, and time horizon.

Life Changes

Major life events, such as getting married, having children, changing jobs, or planning for retirement, can significantly impact your financial goals and investment strategy. For instance, getting married may require considering your asset allocation as a couple, while having a baby may prompt you to allocate more funds towards education savings. Therefore, it is important to periodically assess how life changes affect your investment plan and make adjustments as necessary.

Performance Evaluation

In addition to assessing alignment with your goals, it is essential to evaluate the performance of your investments. This involves comparing the returns of your stock, bond, and cash holdings against appropriate benchmark indexes. By doing so, you can determine whether your investments are performing as expected relative to the market. If your investments consistently underperform or exhibit higher volatility than expected, it may be a sign to review and adjust your investment strategy.

Regular Check-Ins

To ensure your investment plan stays on track, it is recommended to set a regular schedule for portfolio reviews. This could mean checking in as frequently as once a month or at least once a year. By setting a specific date for your next review, you can hold yourself accountable and make any necessary adjustments to keep your finances aligned with your goals.

Evaluate your asset mix

Evaluating your asset mix is a crucial step in monitoring your investment plan. Here are some detailed guidelines to help you through the process:

Understanding Asset Mix

Firstly, it's important to understand what an asset mix is and why it matters. The asset mix, or asset allocation, refers to the breakdown of all the assets within your portfolio or investment fund. The main asset classes are stocks, bonds, and cash, and real estate. Diversifying your asset mix by investing in a variety of assets can increase your potential returns and reduce investment risk.

Factors Affecting Asset Mix

When evaluating your asset mix, consider the following factors:

• Risk tolerance: The asset mix should match your risk tolerance. Generally, stocks are riskier than bonds, and bonds are riskier than cash. A portfolio with 90% stocks and 10% bonds, for example, exposes you to more risk but also potentially higher returns.
• Investment goals: Your investment goals, such as saving for retirement or a down payment on a house, should guide your asset mix. Different goals may require different asset allocations.
• Time horizon: Consider how much time you have before you need the money. A longer time horizon may allow for a higher-risk, higher-return asset mix.
• Market performance: The relative market performance of asset classes can cause your investment mix to drift away from your original plan. Regularly review your portfolio to ensure it aligns with your intended asset mix.
• Life changes: Major life changes, such as marriage, having children, a new job, or retirement, may require adjustments to your asset mix. For example, you may want to consider joint asset allocation with your spouse or increase investments for college savings.

Diversification within Asset Classes

When evaluating your asset mix, ensure you are diversified within each asset class:

• Stocks: Consider investing in stocks of small, medium, and large companies (large-cap, mid-cap, and small-cap stocks) as they tend to lead the market at different times. Additionally, include a mix of investment strategies, such as growth and value, to minimize volatility and benefit from different market environments.
• Bonds: Diversify your bond holdings by investing in various types of government and corporate bonds. Consider different maturities, credit qualities, and geographies (domestic and foreign bonds) to balance risk and reward.
• Geographic exposure: Your portfolio should include exposure to both domestic and international stocks, including emerging markets, as financial markets worldwide respond differently to regional and global events.

Monitoring and Adjusting

Lastly, regularly monitor your asset mix to ensure it remains aligned with your goals and risk tolerance:

• Review individual stocks and bonds: Periodically review the performance of individual stocks and bonds in your portfolio. Check if they have met your expectations and if your outlook for them remains positive.
• Evaluate mutual funds and ETFs: Compare the performance of your mutual fund and ETF holdings to their peers and relevant benchmarks. Review fund documents to identify any significant changes in management, investment approach, fees, or benchmarks.
• Rebalance your portfolio: If your asset allocation has drifted significantly from your target, consider rebalancing by adjusting future investments or selling certain investments to get back on track.

Remember, evaluating your asset mix is an ongoing process, and you should regularly review and adjust it as your goals, market conditions, and life circumstances change.

Review your investment strategy

Reviewing your investment strategy is a critical part of managing your Fidelity investment plan. Here are some detailed instructions to help you review and adjust your investment strategy over time:

Plan for the future:

Start by defining your investment goals, whether it's saving for retirement, buying a home, or any other financial goal. Set clear and measurable goals, and consider the time horizon and risk tolerance associated with each goal. Regularly review your progress and adjust your plan as needed to ensure you're on track.

Evaluate your asset mix:

Periodically check your target asset mix to ensure it aligns with your risk tolerance, financial situation, and time horizon. The mix of stocks, bonds, cash, and other investments should be adjusted as your goals and circumstances change. Remember to diversify within each asset class, such as including stocks of different company sizes and investing in various sectors and geographies.

Review your investment strategy:

Stay proactive by regularly reviewing your overall investment mix. Make adjustments if your situation changes or if your allocation drifts from your target. This process is known as rebalancing. You can rebalance by adjusting future investments or selling some investments to get back to your desired mix.

Assess overall performance:

Evaluate the performance of your portfolio by comparing it against appropriate benchmark indexes. Check if your investments are meeting your goals and performing as well as comparable investments over a reasonable period. Remember to consider the level of risk taken to achieve the returns.

Stay disciplined:

Emotions can impact your investment decisions, so it's essential to stick to your disciplined investment plan through market ups and downs. Avoid making impulsive decisions based on short-term market movements. Instead, focus on your long-term goals and adjust your strategy only when necessary.

By following these steps, you can effectively review and adjust your investment strategy over time, helping you stay on track to achieve your financial goals.

Assess overall performance

Your checkup should include an assessment of your portfolio's overall returns. You should check in at least annually, if not more frequently. When evaluating performance, context is key. You need to know two things: whether your portfolio is on pace to meet your goals, and whether it has performed as well as comparable investments over a reasonable period of time.

If your portfolio's performance has fallen short of your needs over a long time period, or if you find you cannot tolerate the volatility of your investment mix, you may need to revise your strategy, perhaps by saving more or revisiting your investment allocation.

You also want to see how your individual investments have performed. Your first instinct may be to look at the bottom line—we all want to see the value of our investments rise. But what may be more important is that your investments perform in line with your strategy. For instance, an aggressive investor looking for growth should expect to see periods of large gains and losses aligned with the performance of the stock markets, while a more conservative investor would want to see less volatility.

To make a meaningful comparison, check the returns of your stock, bond, and cash holdings against benchmark indexes that are appropriate for each. The exact benchmarks to use will vary based on your particular strategy, but here are a few examples:

• US stocks: The Dow Jones US Total Stock Market Index measures the performance of a broad range of US stocks.
• International stocks: The MSCI All Country World Index (excluding the US) measures the performance of stocks in emerging and developed markets outside the US.
• Bonds: The Barclays Capital US Aggregate Bond Index measures the performance of investment-grade bonds traded in the US.
• Short Term: The Barclays Capital US 3-Month Treasury Bellwether Index captures the return of Treasury bills with maturities of less than 3 months, a useful proxy for cash accounts.

Using benchmarks will give you a snapshot of your portfolio's performance relative to the market. Ideally, you want your returns to be close to, but (hopefully) exceeding, the relative benchmarks and exhibiting a level of volatility consistent with or lower than those benchmarks. Returns that differ dramatically from the benchmarks—on either the high or low side—may indicate that your investment portfolio may need a review to understand what is causing the difference. And it is important to note that most investors are in it for the long haul, so don't let short-term performance weigh too heavily in your decision-making.

Consider these steps:

• Stay on plan: Successful investing can start with laying out clear goals and, over time, making sure your performance is on track to meet those goals.
• Look for red flags: Keep an eye on holdings that are significantly underperforming their asset class benchmarks.

Plan for the future

The first step to monitoring your Fidelity investment plan is to ensure you have a plan in place. This plan should include clear goals that are in line with your investment horizon, financial situation, and risk tolerance. If you are still saving towards your goals, you can strategize how to put your money to work. If you are living off your investment portfolio, you can evaluate the income potential of your holdings and determine how much you need to sell to meet your income needs.

Fidelity's Planning and Guidance Center allows you to create and monitor multiple independent financial goals. This service is free to use, although expenses charged by your investments and other fees associated with your account will still apply.

• Review or create a plan: Consider an automated savings or withdrawal program to ensure your savings or cash flow reflects your priorities and overall plan.
• Set a date for your next portfolio review: Scheduling regular check-ups will help keep your finances on track as you work towards your goals. It is recommended to review your portfolio at least annually, or as often as every month.
• Evaluate your asset mix: Ensure your mix of stocks, bonds, and cash aligns with your risk tolerance, financial situation, and time horizon. Major life changes, such as getting married, having a baby, or planning for retirement, may require adjustments to your asset allocation.
• Review your investment strategy: Reevaluate your overall investment mix in light of any changes in your situation and make adjustments as necessary, a process known as rebalancing.
• Target areas to rebalance: If your allocation to any asset class has drifted significantly from your target, you may need to act to get it back into balance.

By following these steps and regularly reviewing your investment plan, you can ensure that your investments remain aligned with your financial goals and that you are on track to achieving them.

Frequently asked questions