To prepare for a portfolio review, you may need to bring last year's tax return, recent statements from your 401(k) or other employer-sponsored retirement plan, life insurance policies and other documents suggested by your investment professional. When the review begins, here are a few things to look for:

• Suitability of investments - You'll need to make sure your investments are suitable for your individual needs. This may mean holding on to investments that are, for the moment, not "doing well" as defined by traditional measures, such as stock prices. To cite a recent example, from 2000 to 2002, many investments were "down" - and yet, they were still the right ones for some people to own. This isn't to say you don't want to know your investments' recent performance history - just don't let it be the determining factor in making "buy" or "sell" decisions.
• Portfolio balance - Investment portfolios are never "static." You should be open to making adjustments in response to changes in your life; i.e., a child nears college, you move closer to retirement, etc. Consequently, it's a good idea to review your holdings periodically to see if they are still properly balanced in a way to help you make progress toward your goals. At the same time, you'll need to make sure your portfolio is still aligned with your risk tolerance; in other words, you don't want to inadvertently take on more risk than you'd like.
• Tax efficiency - Many people don't pay sufficient attention to the impact of taxes on their investments. A portfolio review may be a good time to examine your situation and determine if you are fully taking advantage of tax-deferred vehicles (such as your 401(k) or traditional IRA), tax-advantaged free investments (such as municipal bonds) and tax-efficient strategies (such as holding stocks for the long term to achieve the best capital gains rate). Be sure to consult with your tax advisor prior to making any "tax-smart" investment decisions.
• Changes in investment-related laws - Like most people, you are probably busy with your work and family, and you may not have time to stay current on the always-changing laws that can affect your investment strategies. At your portfolio review, your investment professional can inform you of these changes. In 2006, for instance, the new "Roth 401(k)" was introduced; if you have this option where you work, you may be able to receive tax-free earnings on some of your 401(k) dollars.

To stay on track toward your important financial objectives, you will find few events more helpful than your portfolio reviews - so make the most out of them.

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