REVIEW: An Important Step Towards Financial Success

Published by Sharekhan Education | January 5, 2021

REVIEW: An Important Step Towards Financial Success

Mrs. Sharma had chalked out a well-defined investment strategy to meet her financial goals and had diligently implemented it. For the last three years her SIP’s were running smoothly but for some reason she saw no progress towards her goal.

Mrs. Sharma had kept an eye on her portfolio; she was tracking her investments regularly at pre-defined periods. She was aware that starting on an investment regime i.e. implementing her wealth plan was just the beginning and not the end of the process. Unlike Mrs. Sharma, many investors are ignorant of this important step that could take them closer to their financial goals. To achieve their goals they feel that putting their plan into action and initiating their SIP’s is all that needs to be done. Really!!

To achieve financial success, to meet your financial goals and objectives,

1. You need to know whether the investments you have chosen are performing or not? This means that you need to check on your investments performance. For example if you have invested in an equity scheme then you need to check if this scheme is delivering returns as expected or not. If the schemes performance is not as expected then you need to take some action else achieving your objective may be a far-fetched dream
2. You need to know if your strategic asset allocation & in turn your portfolios risk level is same or not. In volatile times this is more important as volatility can grossly skew your asset allocation and change your portfolio’s risk level. Bringing back your asset allocation to its target percentage is vital for financial success.
3. You need to know the impact of your changing personal or professional circumstances on your portfolio. Any change in either can impact the achievement of your goals. For example a salary hike can certainly increase your disposable surplus which in turn can offer a welcome boost in achieving your goals faster; while a job loss may put a full stop to your dreams.
4. You need to know whether with changing market conditions you can still handle the same level of risk as before or not. If market volatility scares you then you need to pare down your equity investment.

Summary:

Now all this and much more is possible only and only if you keep a check on your portfolio. Keeping an eye on your portfolio is Review. A timely review can help you decide when to bring your portfolio back to its targeted allocation & risk levels, when to buy more or sell an investment etc. In short, Review is that important & integral part of your investment process which will help you understand the performance of your investments and keep track of your progress towards your goals.

Generally it is good to conduct an annual review, but depending on the money invested and the volatility of your portfolio, you can conduct a more frequent review on a half yearly, quarterly or even a monthly basis.

So to achieve financial success what is important is that you schedule a review process and STICK to it.

By enrolling in this stock market course, a learner can learn the basics and the various aspects of trading.