Change is inevitable and to follow and believe in it is the best way to move with time. The same principle applies to investment. As a financial investment when you go ahead with a plan you weigh the pros and cons. To weigh them the need to review the portfolio each year arises. With the radical change in the economy now and then reviewing becomes a process. It helps you understand the outcome of the investment and where will it take you in terms of finance. Let us elaborate on these and perceive the reasons well.
1. Rebalancing portfolio: Portfolio rebalance helps you consider the decision you must have made last year. This allows you as an investor to continue having a good investor profile that you may have developed after years of diligence and planning. Rebalancing becomes requisite as the market has relentless fluctuations that may affect the portfolio eventually. To mitigate this and transform it into a positive one, reviewing annually reflects your judiciousness.
2. Sell and buy: Where rebalancing would be to adjust what you have, it also gives you a chance to sell the non-performing stocks and buy the performing ones. This kills redundancy and makes the portfolio more attractive. By reviewing the portfolio annually, you stand a good opportunity to buy what is giving returns, helping you gain more profits and save for the future. Similarly, selling those that are non-productive is simple rebalancing the liquidity to buy another investment policy.
3. Taxes: Reviewing helps you shun bad rubbish and gain good profits, along with helping you manage the taxes. Every investment you make has some tax benefits and they can be leveraged upon by reviewing and altering the investment as per the current situation so you get maximum tax benefits.
4. Overlapping of funds: Sometimes to make the portfolio attractive investors buy similar funds but with a different name. This means that the value of the funds is usually the same and there is a portfolio overlap. If not reviewed the losses and gains would remain the same throughout the year. So either you have a financial consultant, or if you are doing on your own, you must invest carefully to prevent the overlapping of the portfolios.
Other than these reasons, you must also keep the KYC handy and updated so you can avoid discrepancies.