Shopping for new investments is often more appealing than reviewing your old ones. However, it’s important to take a step-by-step approach to reviewing your investments rather than getting distracted by new investing stories. Follow our step-by-step guide to review your investments once a year and ensure their performance.
Carrying out a full health check on your investments at least once a year is crucial. Choose a time that suits you, but be careful not to check too often, as this can lead to unnecessary changes and costs. If you’re a long-term investor, constantly switching investments doesn’t allow ideas to develop. Reviewing your portfolio annually is essential to accommodate changes in your circumstances and ensure your investments align with your goals.
Start by considering why you began investing and whether your goals remain the same. Evaluate your current financial targets and time horizons to determine if the growth rate of your investments matches your needs. Assess the performance of your investments since your last review and compare them to the wider market and their peer group. If they are not meeting growth targets, consider replacing them. Ensure your portfolio is diversified to minimize the impact of different economic scenarios.
Check that your asset allocation hasn’t drifted from your desired mix. Use online tools to determine the current allocation for your entire portfolio. Portfolios often become overweight in areas that are performing well, so correcting asset allocation forces you to invest in areas that are underperforming. This helps maintain a balanced portfolio.
By following these steps, you can effectively review your investments and make necessary adjustments to ensure their performance aligns with your goals. Remember to review your portfolio at least once a year to account for changes in your circumstances and market conditions.
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