Portfolio review: Its importance and how frequently it should be done?

As an investor, you tend to put in a lot of effort to build an investment portfolio. But, do you keep a regular check on your mutual fund investment portfolio? In order to save money and invest it profitably, you must analyse your plan from time to time. Only then, you can enjoy the real benefits of your investments.

Some of the investors build a wrong concept in their mind and they think, why they need to perform a regular check if there are fund managers to manage the schemes in which they invested. Surely, there are expert fund managers who apply their best strategies to fetch the maximum possible returns for you. But, owing to market conditions, some of your investments do well at times, while others will not if you do not keep a regular check on them.

Why should you monitor your investment?

As already mentioned above, to get the best return on your investments it becomes vital to keep check whether all forms of investments are giving fruitful results or not. The market situation keeps changing which ultimately affects your investments.

If you find that one of your investments is giving you lower returns, then you can make changes to rebalance your portfolio. This way you can reap the benefits as calculated. Rebalancing ensures that your portfolio does not become overly dependent on either the success or failure of any one investment or asset class at any given time.

When should you check?

How often you need to check largely depends on the type of investor you are. Active investors who constantly buy and sell individual stocks will monitor performance frequently, perhaps daily. But individuals with well-diversified managed portfolios investing for the long term do not need to check their portfolios constantly.

‘‘For many long-term investors, checking every three months is fine. Others may prefer checking at least once a month. It’s very much an individual decision. Younger investors saving for retirement might only check every six months or less often. But if your fund is consistently performing poorly for 3-4 quarters then you should take some steps to rectify it.’’ Suggests Hemant Rustagi, CEO of Wiseinvest Advisors.

How should you check?

There are many online portals or apps like Zerodha coin, myCams, Paytm money, etc… where you can check the performance of your portfolio. You can make changes as well on some of the online platforms. You just need to create your account, put in the investment details, and review it. If you are not so tech-savvy person then you can take the help of a financial advisor whom you know for a long time and can trust him. He should also be able to answer all your queries.

Conclusion

During your review, suppose you observe a trend of poor performance over the last couple of years, you should know that it is time to take a different approach. Again, analyse stocks, mutual funds, or bonds that have been reasons for such bad performance.

Lastly, whatever step you take, do not allow emotions to affect your decisions. Create an investment policy statement with guidelines that you are sure you shall follow in the long run. Only then, your entire exercise will be worthwhile.