Second-Half Checkup: A Five-Step Program

I love the summer. The beach, the sun, the early afternoon frozen drinks.

Compared with those options, it's no surprise the last thing you want to be thinking about is your current financial situation.

But you're halfway through 2005 and if you have upcoming expenses or a holding that has thrown off your asset allocation, you may need to do some reconfiguring.

There's certainly no need to get off the beach at this point. Just print out this list, grab your recent brokerage statements and a recent pay stub, and dig your toes deeper into the sand as you heed the following suggestions.

Check Your Allocation

Making sure your mix of stocks, bonds, cash and other assets (like real estate) remains on target is the most important midyear task.

"If it's off by more than five to 10 percent, don't wait for year-end to rebalance," says Rande Spiegelman, vice president of financial planning at the Schwab Center for Investment Research. Do it now.

So if your shares of Google (GOOG Quote) or Genentech (DNA Quote) have taken over your portfolio since you bought them, it's probably time to sell some of that position. Granted, selling a winner is the hardest part of investing but, hopefully, you established a breakpoint when you bought the stock. Now you need to adhere to it.

Don't be greedy. If you traded through the 1990s, you know what can happen.

If you haven't reevaluated your interest-rate exposure recently, do that too. Remember, with all this interest rate uncertainty, you need to be in financial vehicles that will grow if and when interest rates go up. So make sure your fixed income is weighted in shorter maturities. And shop around for a more competitive rate on your savings accounts. With short-term CD rates around 3%, they might be worth considering.