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

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. ...

Birla Sun Life Mutual Fund Launches Birla Sun Life NIFTY ETF

Birla Sun Life has launched a new fund namely, Birla Sun Life Nifty ETF, an open ended exchange traded fund. The new fund will be open for subscription from 4th July to 18th July 2011, at an offer price of Rs 10 per unit. The investment objective of the scheme is to generate returns that closely correspond to the total returns of securities as represented by S&P CNX Nifty, subject to tracking errors. No exit load will be charged under the scheme. The performance of the scheme will be benchmarked against S&P CNX Nifty and will be managed by Satyabrata Mohanty.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   1) DSP BlackRock Mutual Funds: http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html   2) Reliance Mutual Funds: http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html   3) Birla Sunlife Mutual Funds: http://prajnacapital.blogspot.com/2011/...

Mutual Fund Reivew: Birla Sun Life Asset Allocation Conservative

Birla Sun Life Asset Allocation Conservative has numbers on its side to prove its credibility… Don't be surprised to find this Fund of Funds ( FoF ) in our recommendations. It has earned its place. And despite the difference in the structure of the product, there is no arguing with the numbers.   Of the total 6 years of its existence, the fund has been among the top 10 funds in its category in four of them. Last year it put up an average show and the only year it underperformed its peers was in 2008.   One aspect to look at when investing in an FoF is the expense ratio. The expense ratio of an FoF is capped at a lower limit of 0.75 per cent (2.50% for an actively managed fund). However, the FoF not only has its own expense (though lower) but even the expense ratio of the fund it is investing into. Fortunately, the fund manager takes that into account. "Expense is one of the important criteria used for fund selection and is the main reason for our investment in BSL Ind...

Short-Term Investment Options in Mutual Funds

Mutual funds offer liquid funds and ultra short term funds in the debt category, which are suitable for short investment periods. Ultra short-term funds were earlier known as liquid plus funds. Liquid funds invest in money market instruments with a maturity of 91 days or less. However, there are no such restrictions for ultra short-term funds. Who should invest in these? These are open-ended schemes. Investors with a short investment horizon or with surplus cash and low risk appetite should look at these. These could include corporate as well as retail investors. Those interested in staying invested for less than 15 days can opt for liquid funds. Retail investors who want to remain invested for two-four months, can look at ultra short-term funds. The short duration for both liquid and ultra short-term funds shields them from any interest rate volatility.   What kind of returns do they offer? In terms of an investment period less than 15 days, these funds are comparable to a ba...
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