4 Reasons To Periodically Review Your Mutual Fund Portfolio

4 Reasons To Periodically Review Your Mutual Fund Portfolio

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  •  3 min
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  • 05 Feb 2023

Mutual funds are a popular investment option. You can meet a number of your financial milestones if you invest in mutual funds in a proper and structured way. However, mutual fund investments also require patience and timely monitoring. This is why you need to review your mutual fund portfolio from time to time. Read on to know more on why this is important.

Your Financial Milestones May Have Changed

When you had first invested in a mutual fund, you may have been younger and did not have too great of a responsibility. This scenario is bound to change a few years down the line, where perhaps you need to save for your family and also for the future. As your financial milestones change, your investment priorities will also change accordingly so that you can more effectively meet your current financial goals.

Opportunity To Detect Better Funds

Newer investment options may be available in the market now. These may not have been around when you started investing in mutual funds. This is why you should review your portfolio every few years. Make sure you have the best mix of mutual funds that is aligned to your financial goals and change in lifestyle.

Change in the policies of the government

Financial markets are heavily impacted by the policies of the government. This is why you will see the stock prices falling or rising after a budget is announced. Since mutual funds are directly affected by the fluctuation in stock prices, they change when the policies of the government change. Similarly, you may also notice a change in the performance and yield of the mutual fund if there is a change in the tax structure. Also, when the banks, especially the RBI, review their rates of interest, the financial markets get impacted. Your mutual fund portfolio may be affected by the changes in government policies, especially changes in tax norms, and that is another reason why you need to monitor the portfolio from time to time.

To diversify your portfolio

Last but not the least, always try to diversify your portfolio as it helps to balance out the risk profile and also bring in better returns. If you stay put in a single mutual fund for a long time, you might miss your chance to diversify the portfolio and make the most of it. Reviewing your portfolio periodically - preferably annually - would help you reassess your investments according to your financial goals and help you diversify your portfolio across asset classes.

As you can infer from the points mentioned above, there are some vital reasons why you should periodically review your mutual fund portfolio. Speak to your financial advisor today and choose the funds that will help meet your financial goals. Be patient with your investments and you will definitely earn the best yields in the long run.

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