The carefree days of summer are here and while we try to squeeze the most out of it, our investments may not be getting the attention they deserve.
Trading volumes are low in the summer, which could boost volatility while our attention is elsewhere.
Here are five tips to ensure your portfolio doesn’t take a vacation while you’re having fun:
- Set conditional orders. It doesn’t cost anything to set stops to automatically trigger a sell order and limit losses if your stock falls below a pre-set level. A trailing stop can follow the stock as it rises to lock in gains.
- Automatically reinvest dividend payouts. A dividend reinvestment plan, or DRIP, will use any cash payout from a stock to buy more shares in the same company. It’s a great way to compound cash payouts and own more of the company over time. Public companies love them because it keeps their stocks in demand and in most cases don’t charge trading fees.
- Reinvest fixed income. If you hold fixed income, check to see if any maturities are due over the summer and insure they are reinvested immediately. If they mature without instruction, they will remain in your account as cash and ultimately be dead money.
- Keep contributing. If you’re not already making automatic contributions to your registered retirement savings plan (RRSP) it’s a good way to avoid a crunch when the contribution deadline comes in March. By making regular contributions over several periods of time you lower volatility. It’s called dollar-cost-averaging.
- Stay in touch. Be sure your advisor can get a hold of you of something comes up relating to your portfolio. If your advisor is going on vacation be sure you know who will be maintaining the client list.