Tips for reviewing your investment portfolio

Reviewing your investments? It’s a great habit to get into, even if you don’t make any changes. Whether you’re a seasoned investor or a complete novice, regularly reviewing your investment portfolio is a critical step in optimising your returns, minimising risks and staying on track for your financial objectives.

In volatile markets, staying proactive and informed can make all the difference. Here are some tips to help you ensure you’re making the most of your investment portfolio.

Review your objectives first

The first step for any investment portfolio review is to consider your underlying ambitions. If you already have financial objectives, consider if these are still valid or adjust them slightly to correct your course. If you don’t have any, do some thinking.

Whether you’re investing for retirement, growing your wealth or working towards a specific financial goal, understanding what you’re targeting gives you direction to allow you to prioritise more effectively. A portfolio with a clear purpose is likely to perform better in line with your goals.

Consider if you need to diversify

Diversification is key to managing risk in the world of investing. Placing all your eggs in one basket only increases the chance of you losing them all if the basket falls. Review your portfolio to ensure you’ve got enough diversification to protect yourself from market downturns and dynamic market conditions.

Investing across a range of asset classes such as stocks, bonds, property, commodities and crypto is common practice to spread risk. Other options such as index trading are intrinsically lower risk but help to grow wealth reliably over time.

Assess performance regularly

Monitoring your investments regularly is vital to ensure each is contributing to overall portfolio performance. Identify any underperforming investments and consider if they still align with your diversification efforts and objectives.

Be prepared to make logical adjustments to your portfolio if necessary, but be careful not to make rash judgements and decisions. 

Rebalance when necessary

Market fluctuations can cause your portfolio allocation to deviate over time. Rebalancing your portfolio through selling overperforming assets and reinvesting in underperforming ones can help to maintain your desired risk levels and keep you on track for your objectives.

Consider whether better-performing assets are likely to continue in that fashion or whether you can benefit from returns now and reinvest to drive further growth.

Stay disciplined

The key to successful portfolio reviews is to maintain discipline and avoid making impulsive decisions based on short-term fluctuations or ambitions. Investing is a long-term strategy, after all, so avoid chasing quick wins. Consistency is key.