Skip to main content

Do a year end review portfolio

As this calendar year comes to an end and the New Year sets in, it's time for a number of review and allocation exercises for investors


   Some make it a habit to look into all the financial issues every December. The argument is that the year-end is a relatively free period and more importantly, a number of financial markets like equity are not very active during this period. This, according to them, makes the portfolio less dynamic and in turn allows one the much-needed time for review.


   Is then a new calendar year a good time to reset the clock for an investment portfolio?


   While the timing is according to the convenience of the investor, a portfolio should be on an yearly basis as it makes the investor more nimble-footed. You should be careful as a review need not amount to chopping and churning, but can be restricted to certain guidelines. For instance, if an investment has been made with the specific objective of meeting expenditure, you should monitor if it is meeting the need. A classic example is investments in tax saving schemes. At a younger age, an investor may have invested only Rs 40,000-50,000 to take care of the tax relief. The increase in income over the next few years may push him to allocate more.


   Similarly, a systematic investment plan (SIP) to take care of a property investment may become insufficient if there is a sharp rise in property prices or if there is a change in the needs of the investor. Hence, a portfolio should focus on a number of factors which need not amount to switch-in or switch-out of a product. It could be more from a strategic point of view.


   Here are some guidelines for reviewing a portfolio:

Expense and income management    

Investment is all about putting the surplus money into good use. Hence, if there is a change in income, recalibrate the investments. It holds good for expenses too. In the high-cost inflation scenario, chances are that investments may not materialise as planned earlier and it is not financially prudent to make investments at the cost of borrowing.


   The New Year is the best time to draw up the expense and income statement.

Draw fresh goals and review old ones    

While an investment journey for many begins with the idea of accumulation, it should acquire the shape of financial goals over a period of time. Not only does it make the process exciting but also gives a sense of achievement when completed. Hence, make a list of financial goals at the beginning of every calendar year and break them into shortterm and long-term goals.


   Treat yourself to some goodies after achieving goals as every individual needs a pat on the back for a great job done. More importantly, if a goal finds itself in the list for too many years repeatedly, it is also time to accept the reality and strike it off from the list. So, the best way to deal with the problem of non-performance is to be little realistic with the entire process.

Review investments    

This is the most important aspect of a New Year exercise and it can be achieved in a number of ways. The simplest of them is to make sure that all your monthly and annual investments are met as per the deadline. For instance, if you have signed up for a SIP, check if all installments have taken place. So is the case with long-term products like insurance premium, public provident fund or annual tax returns. Since most of these investments require annual payments without fail, they should be priority.


   The next stage is the review of performance. Any non-performing investment over a long period of time should find action in the new calendar year. Typically, such actions are necessary in the case of equity investments. For those who are focused on asset allocation, the exercise should be even more stringent as the equity markets are more volatile as compared to other assets.

 

Popular posts from this blog

Debt Mutual Fund Dividends are Taxable

DDT is deducted when a non-equity fund declares dividends. Equity and balanced fund dividends are tax-free The AMC is correct to deduct the dividend distribution tax (DDT) as it is mandated by tax laws. DDT in mutual funds is deducted every time a non-equity fund declares dividends. Equity fund and balanced fund dividends are tax-free . It is possible that you have invested in a non-equity fund for the first time or have received the dividend under a non-equity fund for the first time. That is why this is the first occasion when you have come across DDT.   The rate at which non-equity schemes deduct DDT has also gone up after the July 2014 budget. This is due to a change in calculation methodology. Earlier, if the fund has to declare a dividend of R 100, it used to make a provision for R 128.3, paying R 28.3 to the taxman and distributing the balance to the investor. This allowed the investor to bear less tax since the effective tax rate was 22.07 per ce...

Franklin India High Growth Companies Fund

Franklin India High Growth Companies Fund Online One of the key developments that the Street is keenly waiting for is a cut in interest rates by Reserve Bank of India . With demand rising gradually, a rate cut is expected to boost earnings growth for companies. In such a situation, schemes which invest in high growth companies are best suited, especially when seen from a long-term perspective. One such scheme is Franklin India High Growth Companies Fund. Fund managers Anand Radhakrishnan, Roshi Jain and Srikesh Nair strictly follow valuation parameters when it comes to choosing stocks.Valuation parameters, such as enterprise value, price-to-earnings growth ratio, forward price-to-sales ratio and discounted earnings per share, play a critical role in selecting companies for investments. Taking into account these parameters, the fund managers invest in companies which are poised for high growth in their respective sectors. This approach has been in favour of the scheme and it has perform...

Avoid NFOs

  Don't get taken in by the flurry of new fund offers. You will be better off sticking to the tried and tested schemes.   For the past one year, to cash in on the bull run in equities, mutual fund houses have gone on a new fund offer (NFO) overdrive. But experts are unanimous in their advice: avoid NFOs . While past performance is not an indicator of how a fund will fare in the future, it does tell the investor how skilful the fund manager is. This crucial information is missing in an NFO. Not only is there no track record to judge an NFO by, many NFOs are similar to funds that already exist. If the new fund is similar to existing funds, you are better off investing in the latter. Around 67% of the new launches in 2014 were closed-end products. Investing in the NFO of a closed-end fund is doubly risky. In case the fund's performance is lacklustre, a closed-end fund does not allow you to exit. Even though closed-end funds are listed on the stock...

Mutual Fund Exit Load Changes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Mutual Fund Exit Load Changes AMCs don't communicate about any change in exit load directly with investors, but do update on their website   The exit load applicable to your investments is the load which existed at the time when you invested in the particular fund. Any subsequent changes in the exit load will not be applicable to your investments.   However, Asset Management Companies ( AMCs ) periodically publish addendums in the newspapers, which state any change in exit loads of specific schemes managed by them. Such changes are also posted on their websites. However, a direct communication to an investor is not made, considering the costs involved in doing so. In their own interests, investors should not only track the performance of the funds they i...

Atal Pension Yojana contribution Tax Benefit for spouse

Contributions to Atal Pension Yojana (APY) are eligible for the same tax benefits as the NPS. This means that the contributions can be claimed under Section 80CCD (1B). The current limit for Section 80CCD (1B) is   Rs   50,000, over and above the   Rs   1.5 lakh limit under Section 80C. Section 80 CCD (1) is a different one, meant to cover employers' contribution towards NPS . You cannot get tax benefit by investing in the name of your spouse under Section 80 CCD . ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in India for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Religare Tax Plan 4. DSP BlackRock Tax Saver Fund 5. Franklin India TaxShield 6. ICICI Prudential Long Term Equity Fund 7. IDFC Tax Advantage (ELSS) Fund 8. Birla Sun Life Tax Relief 96 9. ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now