An Investment Strategist's Guide To Maintaining Your Portfolio's 'hygiene'

Let's think back to March 2020. Where were you, what were you doing, and what financial choices did you make?

Markets were hitting circuit breakers almost every other day for two weeks, and investment strategists, like me, were calling clients to ensure they weren't making irrational decisions while accounts were down substantially. It was a blur.

Yet, only about 60 days later, markets had recovered and were advancing. This monumental period served as a stark reminder that market volatility is an inherent and recurring feature of investing, not a one-time event.

In fact, market volatility has already defined the first half of 2026, stemming from global conflicts, persistent inflation and the Federal Reserve's shifting stance.

Given these challenging conditions, the question for every investor remains: How can we define and maintain a "healthy" portfolio designed to weather these turbulent times?

What makes a portfolio healthy?

First, a healthy portfolio is one built to deliver the returns necessary for your financial plan, while balancing liquidity with total return and combining income and market growth to keep your goals within reach.

Most importantly, a healthy portfolio is one that is fundamentally built around a long-term plan that short-term volatility cannot easily derail.

When coaching clients through market swings, I remind them that long-term portfolios are designed around their financial plans, and short-term dips of 5% to 10% don't change the likelihood of a plan's success.

Over the long run, market returns drive positive financial outcomes; it's critical not to react to short-term swings or social media noise.

We all need portfolio hygiene

This leads to the key to navigating volatile markets: Consistent, non-emotional maintenance. Or what I call "portfolio hygiene."

This is the essential practice of regularly checking in on your portfolio to ensure it continues to reflect the current reality of your financial life.

While it's tempting to obsess over current events during market turmoil, I recommend scheduling this check-up quarterly, regardless of the news.

For your own well-being and investment success, it is important not to overdo it; excessive monitoring during a downturn can become psychologically taxing and lead to impulsive decisions that actually could harm your portfolio.

In fact, one of the most common mistakes I see clients make during periods of volatility is trying to adjust their portfolio based on short-term, market-moving events that are, for better or worse, essentially coin-flip choices.

Take the conflict in Iran, for example: Oil is a hot topic. Some argue that oil has topped, and you should sell, while others contend that continued geopolitical risk could keep prices elevated, making energy assets a buy for the long haul.

Investors who act based on outcomes beyond their control can make knee-jerk decisions, especially in a fast-moving environment.

When is it time to apply some tweaks?

With this in mind, you may be thinking, "Surely I can't always sit tight." So, what are the key indicators that it is time to tweak a portfolio?

Simply put, if your life has changed, it is often time for your financial plans, and, therefore, your portfolio, to change as well. This includes major life-altering events like a marriage, the death of a family member or a new child joining your family. This is where portfolio management truly marries personal finance.

In addition to typical maintenance or life events, change may also be warranted for people with diversified portfolios who are comfortable being aggressive when others are afraid.

In times of market-dislocating risk, these investors can strategically reallocate their financial plan, bearing in mind the market's tendency to "stair-step up and elevator down."

These are the people who have been through volatility before, possess "calluses" when it comes to risk and know that a market dip can be a moment to capitalize.

No matter what, before making any change, especially when feeling pressure from market movements, every investor should ask themselves three simple questions:

• What is the desired outcome?
• Is there a follow-up or another decision to be made after making this change?
• Am I OK with the change not working?

These questions can be a start, but I sometimes advise my clients that the first thing to do when it comes to changing their portfolios during a volatile period is to not do anything. If you have an idea for an adjustment, stop, write it down and revisit it the next day.

Take the time to think about it and consult a trusted adviser or professional. Because if you remember one thing right now, it should be the importance of understanding your own behavioral and psychological biases, as they can cloud your judgment and worldview.

Separating those biases from portfolio decisions, along with having an asset allocation built to be nimble in times of opportunity, is a recipe for success in a turbulent market.

Related Content

• I'm an Investment Expert: These 5 Steps Can Help You Keep Your Head When Market Volatility Causes Others to Lose Theirs
• When Markets Are Jumpy: A Financial Planner Explains How to Stay Grounded
• Recent Market Volatility Offers Valuable Lessons for Investors
• Market Volatility: Creating an Adaptable Retirement Plan
• A Simple Trick for Better Investing: Stop Timing the Market

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.