How often should you check your portfolio: 5 steps to stop your heart beating faster

Updated: September 29, 2017 2:05:25 AM

It is important to think quality over quantity when it comes to managing your mutual fund portfolios. Investors easily get spooked and jump on the bandwagon mid-way just before the wheels come off when markets turn volatile.

mutual fund portfolios, persistent audits, mutual fund, financial advisors, long-term investmentsSimple psychological intuition points out that analysing your mutual fund portfolio too often is more likely to get your heart beat faster.

It is important to think quality over quantity when it comes to managing your mutual fund portfolios. Investors easily get spooked and jump on the bandwagon mid-way just before the wheels come off when markets turn volatile. One has to realise that market volatility is unavoidable. Simple psychological intuition points out that analysing your mutual fund portfolio too often is more likely to get your heart beat faster.

Periodic review
Checking your portfolios once every year will bring you immense joy as compared to the persistent audits done on a daily basis. Regret can be your difficult comrade if you make a foolish move based on excessive investigation. It is, without doubt, human to hate loss far more than we enjoy gain, leading to dreadful decisions in the name of loss aversion. An informed investor who wisely selects and observes his investments is less likely to keep a constant check on the durability of his portfolios. A very good reason could be that the investor has sufficient knowledge in the investment domain, thus letting his investments grow at a steady pace without panicking during market crises.

Dependence on the financial advisors’ broad knowledge of market trends and fluctuations could be another strong reason for the investors’ limited check on his portfolios. An amateur investor who checks his asset allocation along with his investment performance too often panics when the market crashes or falls, which actually may be the right time to buy!

Here are five things to do while looking at your portfolio:

Revision of goals
Our financial goals keep changing. There are various factors that lead an investor to change or add new ones to the existing list. For instance, standard of living, inflation, new financial dependents make an investor want to revisit his investments once in a while.

Performance
It is necessary to check the performance of equities once in six months or a year and not every six hours or daily.

Broad diversification
Expanding your mutual fund portfolio across sectors is necessary. Over-diversification may lead to inefficiency.

Establish long-term investments
You need to have patience with long-term investments. All investment ideas are unique in their own way. Hence, evaluation at the
end of the investments’ lifespan will be beneficial for the investor.

Oversee short-term inconsistencies
Mutual funds are generally risky in nature as markets can get volatile at any point of time. If an investors’ portfolio gets affected by the macro-economic market trends, due attention is necessary.

Therefore, as a long-term equity investor, it is best not to overdo it. Once you keep these five points in mind, you should be okay.

—Quantum Mutual Fund

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