5 Reasons To Review Your Financial Portfolio

By Medha Roy Chowdhury | January 9, 2019

Has 2018 been a financially unrewarding year for you? It’s never too late to mend things. Here are the top 5 reasons why you should take your finances seriously in 2019.

5 Reasons To Review Your Financial Portfolio

Has 2018 been unkind to your financial portfolio? Well, good things always come out of failure. Don’t be daunted by bad decisions. 2019 is your chance to take charge of your money and make the most of it!

Let’s assume that you are on a road trip from Mumbai to Goa, the well-known ‘Dil Chahta Hain’ route. Along the journey, you will have to make plenty of stops at checkpoints, refill the tank, check if the engine is heating up, and make sure that the tyres are perfectly fine. Needless to say, your finances call for the same attention.

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In the course of everyday life, our policies often take a backseat, sitting idle under a thick film of dust. And one fine day, like a bolt from the blue, your past mistakes come back and haunt you. No, we don’t mean to scare the daylights out of you! Relax! The point is to review your financial portfolio to mend the damage and ensure long-term financial stability.

Why do you need to review your financial portfolio, you ask? It is a blueprint of your financial activity, and hence, quite crucial. Read on to know the five important reasons for it.

  1. Shape your own journey to meet your goals

Are you saving for a new home, planning on installing a modular kitchen in your house, setting aside funds for an international trip, or planning for the higher education of your kids?

With such financial targets comes the responsibility to use your money wisely. Not just in terms of savings, but with regard to investments too.

Periodic reviews offer a picture of your current financial state and monetary resources. This gives you a clear idea of the path you must trace in order to reach the milestone you’ve set for yourself.

For instance, let’s consider that you wish to retire at 60. However, you have certain considerations that demand more time and money. Under such circumstances, you can inspect your financial portfolio to decide whether it will be wise to put off your retirement till you reach 65.

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  1. Give yourself the push you need

A regular evaluation of your finances can help you prioritize your goals. Based on your assessment, you can set up an actionable plan to keep potentially high-cost mistakes at bay.

On a closer review off your financial portfolio, you may discover long-standing investments that are not as rewarding as they once used to be.

Just as weeding is important for a garden, your finances need fresh insight and upgrades. The essential question to ask yourself is whether your finances are still aligned with your targets.

A regular checking of your portfolio instills determination and drives you closer to your goals.

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  1. A lot can change in 365 days

A year is enough time to see visible changes in your life, shift in your priorities, and changes in your family dynamics. These call for modifications in your financial strategy.

A lot can happen in a year. You may have to shift to a new house, get engaged, change your job, or even plan on starting a family. Life-changing events such as these have a strong bearing on your present as well as future requirements.

Reviewing your financial plan helps you to deduce whether your objectives are still achievable under the present circumstances, besides enabling you to make them more realistic.

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  1. From information to proactivity

Your financial portfolio is key to understanding your financial requirements. For example, if your family is growing you will need to increase your life insurance cover to provide for your dependents in the event of your absence. On the other hand, if your children work in a different city and are no longer financially dependent on you, you need to re-think your insurance portfolio.

Another common scenario is that of tax benefits. Since the time you set up your financial portfolio, tax laws may have been altered or updated. New income tax laws or increase in income can put you in a different tax bracket.

Under such circumstances, it is wise to have a fair idea of your monetary condition so that you can frame your added responsibilities into your existing plan.

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  1. Transformation in risk appetite and tolerance

Your risk appetite is a function of your age and experience. The level of risk you can tolerate is subject to your income, expenditures, financial responsibilities, and how close you are to your goals.

These determinants are dynamic and keep varying as you go through life. For example, there is a higher chance that a young investor will be willing to take more risk.

If you have invested in equities, then it is prudent to check the current performance and future potential of the stocks and equity Mutual Funds in your portfolio regularly.

Reviewing your financial portfolio aids you in achieving your financial goals by incorporating personal or productive changes in your plan.

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Reviewing your financial portfolio is quite like a thorough medical check-up. It is a probe into your financial health. Don’t be daunted by the task of monitoring your financial habits. To begin, start by asking yourself these simple questions.

  • ‘What does my bank balance say about my financial health?’
  • ‘Are my resources growing?
  • How many loans do I have to repay?
  • Do I have insurance or an emergency fund in place?
  • Am I well-invested? Do I need to review my investments?
  • What are my short-term and long-term goals?

Hopefully, the answers to these questions will set you on the right path to achieving financial nirvana!

Pro tip: Try encouraging more dialogue with your financial advisor. Working in conjunction with a person who has an idea of your financial habits and monetary situation will mean better and effective guidance for you.

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There is perhaps no better adage than ‘learn from your mistakes’. The same holds true for finances. There’s plenty to be learnt and a horde of experiences that will shape the financially stable individual that you want to become.

Not sure where to begin? Start by checking your Experian Credit Score for free!

Do you think that 2019 is going to bring you a step closer to your financial goals? Is a Credit Card or a Personal Loan stopping you from giving wings to your dreams? You’re at the right place.

Explore our website to search, compare and pick out financial products that are best-suited for your budget and goals. What are you waiting for? Get started now!

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Category: Money Management UCN
Medha Roy Chowdhury

About Medha Roy Chowdhury

Square peg in a round hole, Medha reads whenever she gets the chance to. She is happiest when travelling and dreads having to choose between the hills and the sea. Dog lover at heart, she is in pursuit of adopting a few canine friends someday. Weird as it may be, she bakes when stressed. Previously a Market Research Editor by profession, she takes a keen interest in finance. When she is not reading, you’re sure to find her with her ukulele.

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