Review Your Investment Portfolio





Monitoring is critical to know if you are on course.

In terms of criticality, this habit is at par with planning. Your job is only half done if you draft a spectacular plan because, in the absence of a periodic review of your finances, you may never reach your goals. Monitoring the portfolio has a three-pronged impact: it helps weed out non-performing assets, recalibrate investments if the goal seems out of reach, and maintain asset allocation.

It is essential to review every 3-4 months for short-term goals and on an annual basis for long-term goals. Reviewing helps maintain the required asset allocation as well. For instance, if the market is doing well and your equity component is becoming overweight, you will need to bring it back to its original composition. It is a must to take corrective measures and if you can't do it yourself, seek professional help. Monitoring becomes especially important if your financial adviser or agent is handling your portfolio because you need to be fully aware of and comfortable with the investment choices being made on your behalf.

IF YOU DON'T, YOU SUFFER FROM STATUS QUO BIAS

If you refuse to alter your portfolio despite a drastic change in circumstances and the fact that it could adversely impact your finances, you are a status quo investor. You are afflicted by inertia and potential gains are not incentive enough.

HOW TO OVERCOME IT:

Follow a disciplined investment approach or seek professional help. You are not only losing out in terms of the opportunity cost but may even face a financial crisis.