Need to Clean Up a Messy Portfolio? Here's How You Can Declutter Does your portfolio resemble a garage crammed to the max or a junk drawer that's beyond impressive (you never know when you'll need those receipts fro...

Do you have a junk drawer, garage, pantry, or closet that begs for reorganization?

I'm pretty sure that if I took a photo of my pantry for the world to see, most people would either say, "Yep, that's what mine looks like," or "Um, gross. Do you ever clean?" (We found a bag of rotten potatoes in our pantry last week.)

There's just no… time.

When you take a look at your financial life, you may realize with a shock that you haven't peered at your investments for months. Or, like rotten potatoes, your portfolio has started to stink.

Cleaning up a messy portfolio can save you money, potentially increase your investment returns and also offers a whole host of other advantages. Let's take a look at why you should and how you can do it.

Why Clean Up Your Portfolio?

First, let's take a look at the reasons why you may want to spruce, dust and organize your finances.

• You could forget about money stashed away. Wouldn't it be sad to get to retirement and completely forget about the 401(k) you started at age 22, through your first job? You remember it now, but when you turn 64, it might end up as a distant, hazy memory. It might be worth six figures by the time you retire!
• Your fees could overrun you. You may have no idea that you're paying 1% in fees on a particular investment through monthly maintenance fees or other broker fees.
• You miss out on opportunities. What if you could maximize your earnings in the best way possible? Having a plethora of assets may ensure that you have no idea whether you're squeezing the most out of your money.
• You might have some diversification issues. When you're trying to manage several accounts at the same time, the left hand may have no idea what the right hand is doing. It's time to bring everything into the same house.

How to Clean Up Your Messy Portfolio

Let's take a look at a few ways you can clean up your messy portfolio.

Take Stock of Your Portfolio

If you take a look at your portfolio, what do you see? Maybe you're a tech enthusiast and realize that you've bought up stocks solely in the tech sector. Maybe you've held onto a stock, thinking it'll "come back someday" — but it really is a dud. (You've always been taught never to sell!)

Maybe you have way too many stocks to keep track of. Note that you might need an investment professional's help to identify the fact that your investments concentrate entirely on one sector or that you've got too much tied up into individual stocks.

Also take a careful look at market capitalization. Have you invested in a mix of large U.S. companies and small U.S. companies with growth potential? Have you added a nice blend of international companies, emerging markets, growth stocks or real-estate investment trusts (REITs)? (The sky's the limit.)

Instead of gobs of stocks, diversifying in these areas might hit the perfect level.

Get Your Accounts Together

When you use Vanguard, Robinhood and Interactive Brokers (for that fancy trading platform!) and maybe even a few other brokerages, you might feel as if you're spread all over the place.

When you haven't consolidated your accounts, you might not see where you're not diversified or where you've overinvested in a particular sector. Consolidating helps you employ the right asset allocation strategy for your top goals.

Also, combining all your non-401(k) accounts at one brokerage firm simply eliminates headaches as well.

Track Down Old Accounts — Including Those from Past Jobs

In their meetings with clients, financial advisors always ask about old 401(k) accounts, only to find out that many clients have 401(k)s floating "out there" from former employees.

Rolling old 401(k) investments into an individual retirement account does a lot for you — it allows you to choose your own asset allocation and can even expand your choices far beyond what your old employer offers. It's a good way to get your accounts together!

Find Out How Much You're Spending

Do you know how much you're shelling out in fees for a particular investment through a particular brokerage? Part of becoming neat and tidy involves understanding whether you're paying too much through your brokerage account.

Over the course of 20 years, you'll reduce your portfolio value by $10,000 if you pay 0.50% annual fees. On the other hand, you'll reduce your portfolio value by $30,000 if you pay 1% in annual fees, according to the SEC's Office of Investor Education and Advocacy.

If you have a current 401(k), you can start by looking at the fees in that account. (Unlike choosing to contribute to a Roth IRA or another type of account, your company usually dictates where your 401(k) money goes.) Do you have flexibility in your company's 401(k) plan to choose a lower-cost fund in the plan that can still help you reach your retirement goals?

Clean Up Your Tax Liability

Ah, geez. This might be the biggest headache of all. If you think organizing your investments is a drag, try cleaning up your tax liability by going through your investments.

What capital gains or losses have you incurred or will continue to incur? You can get an accountant on board to help you. What tax-sheltered accounts can you implement to decrease your tax hit?

Tax shelter your least-efficient assets and put them in tax-sheltered accounts before you shelter your tax-efficient assets.

You can use qualified retirement accounts or individual retirement accounts (IRAs) to help you lessen your tax liability. You can also take on tax deductions through charitable contributions, student loan interest deductions, mortgage interest deductions, medical expenses deductions, etc.

Explore certain insurance products, partnerships, municipal bonds and even real estate investments. You may also want to explore a foreign tax credit through any international stocks you own.

Again, ask a tax professional to help you figure out how to do this if you're not tax savvy.

Streamline Your Finances

The bottom line: One of the easiest ways you can clean up your messy portfolio involves minimizing the number of accounts and the number of funds you have. Assess when changes must occur, check your tax liability and also pay attention to market fluctuations that could manipulate your asset mix over time.

Skip the rotten potatoes and straighten your funds up now so you can prepare for your best possible (and more organized!) future.