Managing your own stock portfolio can be a hassle, particularly if you have a large number of stocks and bonds. Because asset performance can vary widely, you can quickly end up with a portfolio that is very different from what you intended.

Does that mean you have to pay a financial advisor handsomely to manage your portfolio for you? Not necessarily. There are things you can do to help make things easier.

And if you are currently paying a financial advisor to manage your portfolio, be aware of fees. A 1% fee may not sound like much, but it could actually cost you hundreds of thousands of dollars over the course of a lifetime.

What is Rebalancing and Why is it Important?

Depending on your portfolio mix, rebalancing can be a grueling process. Rebalancing is the process of bringing the assets in your portfolio back in line with their target allocation.

This is necessary because each asset can have very different performance. If an asset outperforms the rest of your portfolio, it will be overweight; the reverse is true for underperforming assets.

For example, if you have a portfolio of two ETFs of 50% each, and one outperforms the other for a quarter, you might end up with a 60/40 allocation.

But if you want to keep them equally allocated, you will have to be sure to rebalance your portfolio periodically. This is typically done quarterly or monthly - or you can do it automatically (more on that later).

Whatever your strategy, rebalancing helps ensure you maintain a healthy portfolio that aligns with your investing goals.

Go With a Simple Strategy

The simplest way to avoid rebalancing headaches is to go with a simple investing strategy. One example is having a portfolio that is 70% total stock market, 20% total bond market, and 10% total international stock market.

Of course, these percentages can be tailored to your risk tolerance and overall strategy. International investing isn’t an absolute must, but it can give your portfolio more diversity, potentially reducing volatility.

Not everyone is bullish on index funds, but they do give you a diversified portfolio without much effort required.

And the key here is that buying just two or three funds will hugely simplify rebalancing. If you invest automatically and just rebalance once per quarter, your portfolio could realistically only need an hour of maintenance for the entire year.

Use a Robo-Advisor

If you want to have a portfolio that’s a little more customized (and, thus, complex), but don’t want to spend a ton of time managing it, another option is to use a robo-advisor.

Robo-advisor is a bit of a broad term and different robo-advisors can have different levels of control over your investments. One we really enjoy using is M1 Finance because it allows you to create custom portfolios, but it still manages all of the rebalancing for you.

M1 Finance uses investing “pies” which allow you to create different slices. Each slice is given an allocation percentage and can be a stock, bond, or ETF. Everyday there is a trade window where the system will buy/sell shares as needed in order to get them as close as possible to your target allocation.

It also uses fractional shares, meaning the allocation will always be very close to your targets.

Pick a Strategy and Stick to It

A common problem investors have is an inability to commit to an investing strategy. People see the Dow Jones or the value of their portfolio decline, and that can be scary!

However, if you prefer a buy-and-hold-strategy, taking your money out of the market because of dips can also be a huge mistake. Not only could you miss out on precious compounding, but those sales will probably also come with some capital gains tax.

While dips in the market can sound the alarm bells, remember that you still own the same number of shares - the price per share has merely declined. And that also means you can buy shares at a discount.

That means that as soon as the market rebounds (and it also has), you’ll be in an even better position.

If you are worried about volatility, the best thing you can do is diversify. That means buying total-market funds and adding some bonds to the mix.

There will inevitably be some ups and downs, but if your portfolio is properly diversified, you are giving yourself the best possible chance of success.

Make it Automatic

If you take a look at the variety of finance blogs available on investing, you’ll come across making your investments automatic. That’s because it’s one of the best things you can do to prevent sabotaging your own portfolio. Not only is automatic investing convenient, it also means you don’t have to check your portfolio frequently.

This is why auto-investing is so great. If you invest automatically, you can choose not to look at your portfolio balance, allowing you to avoid those dreaded red numbers altogether.

Most major brokerages allow you to automatically transfer money into your IRA or brokerage. However, not all of them allow you to invest automatically, which is another reason M1 finance is nice.

Remember, keeping it simple will make it much easier for your strategy to work long-term. Automatic investments certainly make it simpler.

Consolidate Your Investments

Consolidating your investments is a great idea - when it’s a good idea. You might be thinking - huh?

Well, there may be times when consolidating your investments isn’t the best idea. Maybe your 401(k) has you invested in some ultra-low-cost institutional fund that you wouldn’t have access to as an individual investor.

Or perhaps you have a 457(b) that you don’t want to draw down yet, and you have a traditional IRA. If you roll your 457(b) into a traditional IRA, you wouldn’t be able to draw it down before age 59 & ½ without a penalty.

These are just a few examples, but you get the idea. However, barring these few sets of circumstances, it makes sense to consolidate investments when possible.

If you have several 401(k) accounts from various jobs you’ve worked, it might be better to move all of them into a rollover IRA.

The fewer accounts you have to manage, the better.

What Does Your Portfolio Look Like?

You might have many different retirement accounts, brokerages, and an IRA. The more complicated your portfolio it is, the more difficult it is to manage.

As you may have noticed, much of the ideas in this article center around the idea of having a simpler, more streamlined investing strategy. And, of course, that is no accident.

If you are having difficulty managing your overly-complex portfolio, don’t wait to start honing in your strategy. The sooner you take action, the better.

After all, for most of us, investing is a long game. Your portfolio likely needs years of time to take advantage of compounding growth, so the sooner you get started, the better.

The good news? Once you set your portfolio up with a solid, long-term strategy, it shouldn’t require a whole lot of maintenance - especially if you are just a passive investor.

So, what are you waiting for? Go ahead and start making that portfolio easier to manage.