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Periodic Evaluation of Your Portfolio

Periodic evaluation of one’s investment portfolio is an important step in the investing process. It is a way to review the past and make adjustments for the future to ensure that one’s financial goals are being met. Periodic evaluation should occur at least once a year, however, more frequent evaluation is often recommended.

When evaluating a portfolio, the first step is to review the overall performance of the portfolio. This can be done by comparing the portfolio’s rate of return to that of a benchmark index. This will provide an indication of how well the portfolio is performing relative to the broader market. It is important to consider both short-term and long-term performance when evaluating portfolio performance.

The second step is to review the individual investments within the portfolio. This should include evaluating the funds, stocks, and other investments that comprise the portfolio. It is important to be aware of any buy and sell decisions that have been made over time to make sure that the portfolio allocation is still in line with the investor’s goals.

The third step is to assess the risk that the portfolio is exposed to. While risk aversion is an important part of being a successful investor, it is important to know how much risk the portfolio is exposed to. This can be done by assessing the investments within the portfolio, as well as the overall market conditions.

The final step of periodic portfolio evaluation is to take steps to ensure that the portfolio remains on track to meet the investor’s goals. This can include making adjustments to the portfolio’s asset allocation or adding new investments. It is also important to consider tax implications when making changes to a portfolio and to remain mindful of transaction costs.

In conclusion, periodic evaluation of one’s portfolio is a crucial step in the investing process. Periodic evaluation should not be viewed as a chore, but rather an opportunity to make adjustments and ensure that the portfolio remains aligned with one’s goals. By assessing the overall performance and individual investments, assessing the risk the portfolio is exposed to, and taking steps to ensure that the portfolio is on track to meet the investor’s goals, performing periodic evaluation will help the investor to be more successful in the long-term.

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