Usually you invest for your long-term financial goals, then forget and never look at those investments. This mistake can prove costly particularly in case of equity investments. You expect certain mutual fund scheme or equity shares to grow after certain years, which may or may not happen. What happens generally is that either it would have out performed or would have under performed. The time when you would have planned and invested, your financial situation would be different than what it is today. So, either your goal would have altered or your priority towards the goal would have changed. What have you done to know whether your investments and goals are not derailed? Have you ever seen and reviewed your investment portfolio and financial goals?
If not, then it is important to do it now and after that a periodic intervals.
Why should you review your financial plan and investments?
Performance of investment:
Certain funds in which you have invested would have performed well in the past, but it is not necessary that they perform well in the future too. You should check the performance of the assets with its peers and the benchmark index. The fund manager of the mutual fund scheme you might have invested would have changed or may be the fund house itself would have merged with some other AMC. These kind of changes can affect your investment. Therefore, it is very important to track the performance of your funds/ investments.
Asset Allocation:
It is very important to analyze your investment portfolio periodically. The asset allocation ratio changes on a day-to-day basis, depending on the performance and proportion of the assets in the portfolio. Certain assets out perform as compared to the expected returns while certain assets under perform. In this case you should rebalance the portfolio as per the proportion. You also need to change the asset allocation when your goal is closer. Suppose if you are only 2-3 years away from your retirement, you need to shift your portfolio from equity to debt systematically.
Reprioritize and/or alteration of goal:
Sometimes your financial situation may take a diversion, which may be positive or may be negative too. You may have to alter and/or reprioritize your certain goals depending upon the situation. For example, if you and your spouse both are working and the regular investments are earmarked considering the income of both; and if spouse quits working to take care of the child, then you may have to reprioritize and alter your goal accordingly. Say you were planning to buy a house after 3 years, but suddenly you received lump sum amount through inheritance, in this case you can pre-pone your decision of buying your new house, assuming investments for other goals suffice.
Hot Canadian Stocks To Own For 2014
Related News
How Mutual Funds can build your retirement corpus? Find out: Differences between financial planners and agents
No comments:
Post a Comment