Chapter 20
20Portfolio Review
Portfolio review is maintenance. It checks whether the portfolio still matches goals, risk, taxes, and life situation. This chapter covers annual review, rebalancing, SIP increases, bad-product removal, and goal progress.
Annual review
Example: one fixed review month lets an Indian household update income, goals, insurance, tax position, and portfolio values together. Review is maintenance, not a search for excitement.
Annual review is a scheduled check of allocation, performance, cost, tax position, and goal progress.
Too frequent review creates noise; no review creates drift.
Review on schedule.
- Review once a year or after major life events.
- Check allocation, performance, cost, and goal progress.
- Avoid changing products without evidence.
Rebalancing
Example: if a 60:40 equity-debt portfolio becomes 75:25 after a rally, the investor now owns more risk than planned. Rebalancing restores the original risk level.
Rebalancing restores target allocation after market movement.
Risk reset
Rebalancing forces partial selling of what rose and buying of what lagged. It is a risk-control rule, not a return-maximizing promise.
Use drift threshold
- Rebalance by calendar or drift threshold.
- Use new investments first to reduce tax and cost.
- Do not rebalance tiny deviations.
Increasing SIP
Example: annual salary increments can raise SIPs without reducing current lifestyle. Step-up investing captures income growth before expenses absorb it.
Increasing SIP aligns investing with rising income and inflation. A flat SIP may become insufficient for growing goals.
Step up with income.
- Increase SIP annually or after salary hikes.
- Link increases to goal gaps.
- Automate step-up where available.
Removing bad products
Example: old insurance-investment policies, expensive regular plans, or overlapping funds may remain in a portfolio through inertia. Removing them releases capital and reduces confusion.
A bad product has poor fit, high cost, unclear risk, or persistent failure against suitable alternatives.
Removing bad products simplifies the system. Exit decisions should be based on role and evidence, not irritation.
Exit with reason.
- Identify why the product is bad before selling.
- Consider tax, exit load, and replacement.
- Do not keep a product because of sunk cost.
Checking goal progress
Example: a child education goal should be checked against current corpus, monthly contribution, remaining years, and revised cost. Progress is a measured gap, not a feeling of comfort.
Goal progress compares current corpus with required corpus at the goal date.
Without this measurement, investing becomes motion without navigation.
Measure path, not mood.
- Update goal cost for inflation.
- Compare actual corpus with required path.
- Increase investment or reduce risk according to remaining time.
