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Four ways to spring-clean your investment portfolio

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(Read caption) American flags fly at the New York Stock Exchange on Wall Street.

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Your garage isn't the only thing that could use a once-over this time of year. Your investments may be in need of some tidying up as well. Here's how to give them a good spring cleaning.

1. Double-Check Your Risk Tolerance

Since bottoming out in March of 2009, the stock market has been on a tear. It's been one of the greatest bull markets ever. But bull markets don't last forever. Eventually, the tide will turn. Will you be ready?

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I'm not predicting an imminent bear market, nor am I suggesting you try to time the market. That's a fool's errand. But I do believe this is a good time to review the assumptions you've used to guide your investments to date.

Especially important here is a review of your risk tolerance. When the market is moving in a positive direction, it's easy to think of yourself as being fairly risk-tolerant. It's only when the markets turn negative that you really discover how strong a stomach you have.

Instead of finding out the hard way that you're not as comfortable with risk as you thought you were, and setting yourself up for panic-selling in a downturn, reassess how much risk you can really handle. Vanguard has an asset allocation questionnaire that can help. It'll gauge your appetite for risk, factor in your investing time frame, and recommend an optimal asset allocation for you.

2. Double-Check Your Allocations

If your risk tolerance has changed, how your investments should be allocated has changed as well, and that means you probably have some work to do. First you'll need to change how your current portfolio is allocated across specific investments — mostly, what percentage of your portfolio is invested in stocks and what percentage in bonds (or stock-based mutual funds and bond-based mutual funds). Then you'll need to change how your monthly contributions are allocated as well.

Whether your investment account is a 401K, an IRA, or a taxable account, you should be able to make these changes online, or call the broker where you have your account for assistance.

3. Rebalance Your Portfolio

Even if you're not planning to change your asset allocation, your asset allocation may have changed on its own.

A year ago, your portfolio might have contained an 80/20 mix of stock funds and bond funds, but what does it look like now? If your stock investments have grown since you first implemented your plan and your bonds have fallen, your actual allocation may now be 90/10. Bring your portfolio back in line with what's optimal for you, given your risk tolerance and investment time horizon, by selling some of your stock holdings and buying bonds.

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It's generally a good idea to rebalance your portfolio once a year. If it's been a year or so since you last took care of this chore, add it to your investment spring cleaning to-do list.

4. Consolidate Accounts

It's not uncommon these days for people to have their investments spread out among several brokers. If you've changed jobs two or three times and rolled your 401K accounts into IRAs at different brokerage houses, you may find yourself dealing with an unnecessary amount of paperwork and navigating a confusing array of rules and fees. Consolidating some of these accounts could make managing your portfolio more efficient and less expensive. That's because implementing your strategy of choice at one broker usually requires fewer trades, which lowers your investment costs.

Choosing which broker to keep is a matter of seeing which one offers most of the investments you want to own for the lowest commissions.

Few people enjoy the process of spring cleaning, but most enjoy the fruits of their labor once the work is done. It's simply more enjoyable to live in a clean, organized house. The same is true for your investments. Taking a few hours to double-check your risk tolerance and asset allocation, rebalance your portfolio, and consolidate accounts should set you up for a more efficient, successful, and enjoyable experience as an investor.

This article is from Matt Bell of Wise Bread, an award-winning personal finance and credit card comparison website. This article first appeared in Wise Bread.