Your Investment Portfolio: Are you Going to ‘Love It or List It?’

By Robert J. Bacarella | October 23, 2019

My wife and daughter love watching HGTV in our house…OK, OK, OK, I admit it, I love watching it too!

Lately we have been watching a lot of the show “Love It or List It”, in which a designer and a real estate agent vie to convince homeowners to either “love it” (stay in their existing, now renovated, home) or “list it” (sell the now-renovated home and move).

In the show, the designer, Hilary Farr, spends her time working to renovate the homeowner’s current home to meet a list of “wants.” (I almost guarantee you, one of those is an open floor plan…that seems to be the big thing, although waterfall countertops seem to be gaining steam.)

In the meantime, David Visentin, the realtor, works to find a house for sale that meets the criteria the homeowners are looking for (cue open floor plan and en-suite…I admit, I didn’t even know “en-suite” was a word before I started watching these shows…for those that don’t know, it is a fancy way to say a bathroom connected to the master bedroom).

At the end of each episode, the homeowners decide if they want to stay in their newly renovated home or purchase a new home that David found them. This is the time where my daughter and I try to guess what they are going to choose (FYI, she is usually right and I am usually wrong).

You might be saying right about now, “I thought this was about investing…?”

While it is amazing to see how Hilary can change the house and how David can find a house that meets the homeowners’ needs, what I find really interesting is how the homeowners got into their current situation. Watching the show, it is easy to see that the homeowner’s current home does not meet their needs—but at some time in the past, it did.

Over time, the homeowner’s needs and wants changed. Maybe they have kids now and need more room, or want to have more people over and need more space, or even have more discretionary income and just want something nicer. What “Love It or List It” does is force them to reevaluate their needs. This reevaluation is exactly what needs to be done to your investment portfolio, as your wants and needs are constantly changing.

Most likely things have changed since you started your current portfolio. Maybe you’re married now or have kids or your overall financial health has changed. Or, guess what, maybe you are just older (I know, shocking). Whatever the change is, you need to make sure you review your portfolio to see if changes are needed.

In some cases, your review will find that only some renovations are needed for your portfolio (you’re “loving it”). An example might be tweaking your allocation of equities and bonds.

In other cases, your review will find that not only is your current portfolio not meeting your current needs, but it is not even close (you’re “listing it”). An example might be your entire portfolio is in small-cap equity stocks, and you realize that your whole risk tolerance has changed.

Whether you decide to “Love It or List It” is just the end product of your analysis. The important takeaway is that things change, and you need to make sure your portfolio changes as well. (Well, also that an open floor plan and cool en suite can really add value to your home.)