Why You Should Review and Modify Your Investment Portfolio Annually

Jun 16, 2018 | 1 year ago | Read Time: 2 minutes | By iKnowledge Team

As we get older, our financial and personal plans may undergo significant changes. Your investment portfolio must adapt to the shift in your life. You need not review your portfolio monthly, rather review and modify your investment portfolio annually. Here is why it is important to conduct an annual review:

1. To stay on track

Review your portfolio to ensure it reflects your need for liquidity, growth, and income. Make appropriate adjustments to rebalance your portfolio so that risk and return are in sync with your preferences. This is crucial as you may be exposed to higher risks than you initially signed up for. Rebalance your portfolio based on your current needs and how much risk you are willing to take.

2. To keep up with financial goals

As your life undergoes changes, you will find that you may have to make changes in asset allocation as well as portfolio composition. If you are just starting off, you may need more liquidity and growth in your portfolio. As you progress in life, your financial goals may change as well. With a stable income and additional responsibilities, your portfolio would need to be tweaked as well. Based on major life events such as a wedding, promotion or income change, ensure that your portfolio is in sync with the changes.

3. To switch to better performing assets

You may have to reallocate assets if they aren’t performing well. If your current investment is underperforming, you may have to switch to a better one to avoid losses. Emotions aside, review your assets quarterly and weed out underperforming assets. Reallocating funds may also cost money; keep that in mind while making any changes.

4. To maintain a balance between diversification and consolidation

If a portfolio has too many funds, you will find it hard to track its performance. If you have fewer funds, you will find it difficult to meet your investment goals or be tax efficient. It is imperative you maintain a balance between the two. If you diversify too much, your returns may not be adequate to meet your needs. Ideally, diversify your funds (be it large-cap, diversified, mid-cap, small-cap, sectoral funds, debt funds, ELSS funds balanced funds etc.) in a manner that you aren’t investing too much or in the same type of stock. This way you minimize risks, see more growth and become more tax efficient. 

5. To check for discrepancies

Take a good look at the consolidated account statements of your portfolio for any discrepancies. Contact the fund houses or intermediaries as soon as possible on any untoward changes. The account statements list all your mutual fund holdings and current values as well as transactions. Ensure that the statement reflects the right values and doesn’t have any errors that could adversely affect you.

Conclusion

In order to be disciplined in your approach to investing, conduct an annual review of your portfolio. This will help you reap the benefits over the long term.

Advt. no.: IA/May 2018/4052

To know about AegonLife’s life insurance products like term insurance plans and other products like health insurance , visit our home page.


Calculate premium for your Term Plan

  • Y N
    • Annual Income
    • Sum Assured
    • Select Cover Upto Age
    • Name
    • Mobile
    • Email ID
Your Annual Premium for Aegon Life iTerm Insurance Plan

RELATED ARTICLES