Happy New Year 2020: Just hours to go before new year is upon us! While partying should continue, and that too within reason, one resolution that everyone must make in this happy time, is to save and invest money to ensure a better future, with satisfactory amounts of money in the bank, for the entire family. While most people have invested in something or the other, they do do not focus on one critical issue - portfolio review and, as a corollary, if required, rebalancing of the portfolio, so as to make sure big amounts of money are made. This is an important part of the money-making process.

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

Portfolio review and rebalancing
It has been found that people are not aware of the ideal way of portfolio review and its rebalancing. According to tax and investment experts, portfolio review doesn't mean you should be checking your investment performances on a regular basis. The ideal way is to review one's portfolio is to check one's portfolio once in a quarter and if required do the rebalancing on a half-yearly basis - get rid of the loss-makers where possible and identifying new investment opportunities.

See Zee Business Live TV streaming below:

Tips to review and rebalance portfolio
Speaking on the hot money tips that would help an investor to review portfolio and do its rebalancing, Alok Agrawal, Head — Research & Advisory at Bajaj Capital said, "Portfolio review doesn't mean checking one's money growth on a regular basis. A portfolio review means an assessment of the portfolio on a quarterly basis. If you start looking at your portfolio regularly, there are chances of getting lured and then committing a mistake." 

He said that during the portfolio review, one should look at the growth rate he or she is expecting from one's investment. Portfolio review means looking at one's portfolio, and it doesn't mean comparing one's return with others'.

Highlighting the importance of portfolio rebalancing in one's investment goals, Agrawal said, "Portfolio rebalancing means diversifying the portfolio and assessing the performance of the asset allocation on a half-yearly basis. It helps an investor to correct one's investment mistakes and if one fund is not giving the kind of returns expected at the time of investment, then another asset portfolio will pare that. So, portfolio rebalancing should not be confused with swapping from one fund to another." 

For example, Agrawal said, it has been found that people over diversify their portfolio by allocating funds to the same category of mutual funds or buying more than 2-3 mutual funds of the same category. For such fund allocation, portfolio rebalancing means closing one and investing its maturity amount in the other fund that has been kept.