• HDFC
• 29 Apr 2017
• Equity Product

HDFC, Tester

The new financial year has begun followed by several regional new years such as Gudi Padwa Ugadi and Cheti Chand, which was celebrated on April 11 and 12.

Over the weekend, people of Tamilnadu and Kerala will celebrate Puthandu and Vishu. On the same day-April 14-Punjabis also celebrate Vaisakhi, which is the New Year based on their regional calendar.

The New Year is all about starting out with optimism and positivity. This year, take a step forward and get your portfolio in order. Portfolio management is all about getting the right asset allocation, monitoring and rebalancing it.

HERE ARE 5 GOLDEN RULES YOU SHOULD ADOPT IN MANAGING YOUR PORTFOLIO.

• Take stock of your portfolio 
  
  Get a complete idea of how your money trail-how much save and invest, and the returns from each of your investments. You can maintain an excel file of your financial statements which can come in handy if you lose any important document. Even many financial portfolios and leading brokerage houses have portfolio trackers, which will give you a snapshot of your investment portfolio, it size and performance. This will be the first step to plan for your future financial goals.
• Review your portfolio
  
  The need to review your portfolio can be triggered by personal or external circumstances.
  For example, if any asset class such as gold, equity or real estate witnesses volatility and you have parked substantial funds, there may be a need to review it. On the personal front, it can be marriage, parenthood or change in asset allocation because of a change in goals and age.
  As a regular exercise, you should review your portfolio once in every quarter for investments of 1-3 years. For long-term investments, which can span from 5-10 years, an annual exercise will suffice.
• The Balancing Act
  
  Regular portfolio rebalancing ensures appropriate asset allocation across debt,  equity  and other asset classes so  that  investment objectives can be realised.  
  Based on the review of your portfolio may require to rebalance it to restore the equity-debt ratio in your portfolio. This can be a function of external circumstances or some change of events in your life. 
  As mentioned above, there is a constant need to rebalance the portfolio on the basis of your age.
• Diversify
  
  Don’t put all your eggs in one basket.” This is a well-known proverb, which best explains the concept of diversification in a financial portfolio. 
  The process of diversification of portfolio to different asset classes significantly reduces the risk quotient of your portfolio. 
  Hence even if you buy blue chip stocks, ensure you invest in different sectors to avoid any risk related to a specific sector. 
  In case of mutual funds, the components in a descending proportion would be large cap, mid cap, index funds and small cap funds. Financial advisors recommend 60-70% of an investor's mutual fund investment should comprise of large cap diversified equity schemes. 30% of the investment portfolio which can also be referred, as the satellite portfolio should constitute mid cap funds. "20-30% of your core portfolio should be index funds, 30% should comprise of actively diversified funds.
• Keep a close family member in the loop 
  
  Last but not the least; maintain a hand-over book either in physical or electronic form, which can come in handy in your absence. You should actively involve a close and trustworthy family member in your investments who can take over your investments if something were to happen to you.