Could Your Portfolio Use a Remodel?

COVID has jump-started several home improvement projects at my house. Since March, I've completed – or nearly completed – dozens of projects, running the gamut from upgrading the attic insulation to finally replacing the broken handles on a dresser. I'm not alone. Consumer data tells us that many Canadians are upgrading their spaces. And it makes perfect sense: In addition to spending more time at home, most of us are also redefining how we use it.

How do we make sure we create the home of our dreams instead of finding ourselves in a reno-gone-bad reality series scenario? We've compiled eight excellent home improvement tips that are equally useful for our portfolios.

1. Follow a Plan

Whether you're investing a lump sum or pumping in funds bit by bit, a plan will help you get the most bang for your buck for your property or for your portfolio. For more information, check out Automated Account Services.

2. Study the Trends but Don't Follow Them Blindly

Things keep changing, today more than ever. To make decisions you can feel confident about, it's useful to get yourself up to speed. For example, if the last time you redid your bathroom was 30 years ago, there are a lot of new options (think: lights, toilets and shower heads all come in “smart" now). But following trends blindly – what behavioural economists call jumping on the bandwagon or following the herd – can be dangerous. As in the markets, some decor ideas have more staying power than others (need proof? carpeted bathrooms used to be a thing).

3. Do Your Research

It's easy to get caught up in the hype, whether it's a skyrocketing stock or a pricey designer sofa. In both cases, a look at the fundamentals – be they economic indicators or info about construction and materials – can help you determine whether the price is commensurate with the value. In the same vein, it's important to do your research before giving in to the pull of buying something that's on sale but doesn't necessarily fit your needs.

4. Stay True to Yourself

Your home, like your portfolio, should reflect you. That bold graphic wallpaper you saw online is swoon-worthy, sure, but what good is it in your breakfast nook if the sight of it startles you every morning? On the other hand, if the idea of a standard white-on-white-white kitchen makes you yawn, it may not be for you, no matter how popular it is. In home improvement as in investing, wherever you fall on the risk spectrum, you should be comfortable with your selections.

5. Check Your Biases Before You Buy or Sell

It's important to keep your biases in check when buying or selling, be it stocks or counter stools. For instance, if you're finally ready to build that dream deck, don't anchor yourself to 2019 lumber prices (not sure if you've heard, but lumber is the new toilet paper). At the same time, if you're selling your spare stuff (read our tips for acing this side hustle), think less about what you paid for it and more about its value on the current market. Don't let loss aversion blind you.

6. Re-examine Allocation

Is your kitchen serving as a work/study/rec space, in addition to you churning out three meals every day (plus snacks!)? Meanwhile, your formal dining room might be gathering dust with no dinner parties on the calendar. For the most part, our homes were not built for this pandemic, so some rejigging, redefining and reallocating of space might be in order. Similarly, you might be seeing spikes in some areas of your portfolio and dips in others. Now is a good time to check on your asset allocation and potentially rebalance. Check out the Portfolio Analyzer tool under My Portfolio for more info.

7. You May Want to Test It Out

Even professional designers don't always know the best paint colour for any given room; they get a few samples and paint test patches. It's the same reason they create mood boards and use virtual kitchen planners – to try things risk-free before committing. Similarly, for investors, a practice account can serve as great testing ground for new strategies.

8. Remember: This Too Shall Pass

It's easy to forget our life pre-COVID and hard to imagine it post. As a result, we can fall prey to present bias, which can be of detriment to our properties and our portfolios. If your kids are learning at home for the foreseeable future, for instance, creating dedicated study spaces for them is wise, but maybe don't demolish the basement's built-in bar and have custom desks installed in its place. Likewise, consider your future needs before making investment moves.

**This article was updated on September 22, 2020.