Follow Three Steps to Financial Health

Ask yourself some questions. What is your primary investment objective: long-term growth, stability or income? What is your investment time horizon? What is your tolerance for volatility and risk? How much of your investment portfolio might you need to access quickly? Are there major events pending in your life, such as marriage, a child, a college education or a new house? Is tax efficiency important in your portfolio? Are there other issues that could impact your investment decision-making process?

Those may seem obvious, but investors don't often think about their investments from a holistic perspective. Rather, they buy and sell individual securities in a vacuum. And far too often, investors look at their portfolios in retrospect and wonder why they own what they do.

Your primary objective, time horizon and risk tolerance are the three key elements of your personal investment profile. Moreover, objective/investment mismatch is the top reason why individual investors become disenchanted with their portfolios and don't reach their longer-term investment goals. Your personal investment objectives can and will change over time.

Countless worksheets and other gimmicks can help you work through the "know yourself" process. Yet, at the end of the day, what it really requires is looking in the mirror, being honest with yourself and candidly assessing what you really want from your investment portfolio.