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Review is Important

Our job does not end at making investments only. We have to review our investments at regular intervals sitting along with our Mutual Fund Distributor. Why review is a must? What can go wrong? At what frequency review should be done? Get answers to all these and more below. Read on.

You have made certain investments. Fine. What next? Before answering to that let me ask you another question – why have you made these investments?

Maybe you have had a single specific goal, for which you have made this investment.

May be you have made this investment simply because you had surplus money available.

Whatever be the reason - you must review your portfolio at regular intervals. Why?

Suppose you have made investments just because you had surplus money. Then also at back of your mind you surely had certain expectations in regards to return from your investments. Are these expectations met? Are your schemes' performance at par with other schemes in the same category?

If you had a specific goal in mind while making these investments then the pertinent questions are - Whether your investments are generating enough return to achieve the goal in time? If your goal is due soon, should you shift your assets then to less riskier products to avoid last mile volatility?

So you see, whatever be the reason behind your investment decisions - review is a must.

What can go wrong?

Many things. Schemes where you had invested may get merged with some other schemes. Fund manager might have shifted. The performance of the scheme might have also got hurt due to adverse change in macro-economic scenario. In case of debt funds you may miss the opportunity that arises due to change in interest rate scenario. And so on. Some are serious, some are not so serious.

Not that you should reshuffle your portfolio immediately for any of the above reasons. But you must take stock of the situations without fail. Sit with your financial advisor and discuss whether any change is required in your portfolio. Performance of schemes may never be linear. That was expected and I am sure that is already taken care of when investments were made. But analysing the schemes’ performance at regular intervals is a must. If there is any compelling reason to make any changes in your portfolio then that has to be made. No one can be correct all the time but ignoring or overlooking mistakes can never be allowed. It is always better to be safe than sorry.

Please note here, review is not only necessary for your investments – but it is also important for your insurances – life, health, general. From time to time you need to check whether existing insurance covers are adequate or not.

At what interval review should be done?

If goal is nearby or critical then quarterly or bi-yearly review may be a good idea. If the goal horizon is still long term then reviewing once in a year is fine. Though at some exceptional situations review can be preponed also.

Review report should always be an easy to understand document. It should contain definite action points for you like - buy, sell, switch, hold etc. along with specific reasons mentioned.

So when is your next review due?