Giving a structure to your portfolio is not the most important task. Equally important is to review that the idea of which you had inculcated a particular fund into your portfolio, does it still satisfies the need? If not where and by how much has it deviated and what correction needs to be made are some of the questions you need to ask when there a deviation from the set targets
However, what is important is to not panic when there are minor changes in the market rates. Due to the increased volatility of the market, changes are bound to happen. If you are an investor who has invested for a long term plan, say about 10 years, then these changes are bound to be corrected.
But if you are witnessing a marginal difference in the expected rate and the actual rate, it advised to withdraw your funds and invest into other funds that have a good performance record. The problem over here can be the imposition of exit loads. Most funds, upon premature withdrawals, impose exit loads on the investors. The percentage of which can go up to 2% on the total fund amount.
If in case, you plan to invest into another fund, make sure you consider the entry loads and other type of expenses you might have to incur. After summing up all such expenses, only if its worth the expenditure, shift to a new one, if not stick to the existing ones. Although the returns might be less, you save yourself from another set of transactions and expenses that you might get into.
More often, due to changes in the financial requirements also can be the reason for reassessing your portfolio. There can be a change in your financial plan, for instance you may decide to fully prepay your home loan amount in a two years time, which you might have earlier decided to pay by 5 years. So such changes in financial decisions may also lead to a revamp in your portfolio holdings.
To sum up, portfolio revaluation is necessary so that, you can identify those funds that are performing poorly, and make the changes that are required. Entering into a debt of a personal loan or a home loan just so because you could not accumulate enough funds to finance your requirements, should not be the case.
Assess and evaluate before you pick a fund. Have faith in the market’s performance. Follow the SIP route into investments. Make sure to re valuate your portfolio at least once every year so that your goals can be at par your finance disposals.