Importance of a Financial Portfolio Review

Your financial portfolio helps you reach your financial goals, and as an investor it is imperative to review and re-balance it periodically.

This is more than often ignored which can be a major setback in achieving your financial goals.

The purpose of a review and re-balance is carried out to keep your investments from drifting away from the financial target you initially set. Additionally, changes in market lead to a dip or rise in the value of your assets thereby making your portfolio too risky or conservative. Not staying updated in a scenario like this puts you in a disadvantage.

Marriage, divorce, birth and death are the four major life events that can impact investing plans. An annual review will allow you to make sure that your plan reflects your current family status and financial situation. A review will also help take care of minor modifications such as changing beneficiaries. Any new or unexpected expenses should be assessed during the annual review.

Likewise, your portfolio income may need to be adjusted. More aggressive strategies that were appropriate earlier in your career may not be appropriate as you near retirement. An annual review can point out how to structure your portfolio to provide the income level you need and identify shortfalls that need to be adjusted.

It is also necessary to reassess your asset allocation, keep it in sync with your risk profile, ensure enhancement of your investment to keep up with increase in remuneration and weed out sectors and funds that are detrimental to your financial goals. A review should also include analysing historical returns of your assets and comparing it with the returns of benchmark indices over the same period. Your investments should reflect your priorities, whether planning for a new home or impending college tuition. An annual review will help you adjust your investments according to changes in your goals and ensure that you are on track.

This is also a good time to look at specific investments. From fund of funds to individual stocks and bonds, evaluate if they continue to have a role in your portfolio based on the past year’s performance and any changes in your objectives.

A portfolio that is regularly reviewed and adjusted to meet your changing life and needs will be more effective in providing the results you and your family need as life progresses. Contact us today to schedule your next portfolio review.

Until next time, take care.



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