Checklist: Portfolio Review

Things to do this weekend with your money:

Here are some ideas for you to review your portfolio intelligently and possibly do some tinkering that might improve your returns without raising your risk level.

Eliminate stubs. We’ll define a “stub” position as a stock holding that accounts for less than 1% of your portfolio. Stub positions tend to drain your profit. If a 0.5% stub position triples, it increases the value of your portfolio by a mere 1%. Isn’t that a terrible waste of a triple? And people who virtually ignore their stub positions can be hit with nasty surprises. Check your portfolio for stubs. Either increase them to at least 1% or get rid of them.

Own about 20 to 40 investments. If you own fewer than 20 stocks, your portfolio might not be diversified enough--though you can solve that problem by including some mutual funds in the mix. If you own more than 40 investments, chances are you’re not going to be able to track them all.

Have a cooling-off period. At the moment you decide that buying a certain stock would be a good idea, start your mental stopwatch. Wait at least 24 hours and perhaps as much as a week. Then reassess.

Be ambitious. Don’t buy stocks hoping for a 15% or 25% gain. That’s a game that brokerage houses like you to play--because it makes you trade more often.

Stick with your asset allocation. Decide on a mix of stocks, bonds and cash that suits your temperament, age, health status, timing of expenditures such as college tuition and need for current income. Then stick with that mix, making adjustments once or twice a year.