To make money from investments, we normally focus upon making the right picks at right point of time. However, equally important is cleaning the portfolio at regular intervals to make it more smart, simple and manageable. Here are some important tips to do so.
Take Inventory and weed out junk. List down all the investments and get rid of the bad ones. Dumping some of your assets early could also trigger a tax bite, so be careful of them and plan accordingly. Also, go digital and dematerialize where ever possible.
Outline and abridge your investment mix. Try to consolidate and shift assets into a handful of investments that reflect your goals.
Build a Contingency Fund: A financial emergency today should not derail tomorrow’s plan. One would need an ’emergency fund’ to hedge one’s savings and investments from comparatively smaller road bumps.
Wherever possible, try to consolidate. It saves both time as well as a lot of repetitive paperwork.. Automate and go online: For monthly installments, bills, insurance premiums, SIPs, etc. – give ECS instructions to your bank rather than writing cheques every time. If you fear overbilling, just set a limit and opt for an overdraft protection facility
Filter noise from advice. There is information overload everywhere which leads to selecting wrong choices, at most times. It’s always advisable to consult a qualified, experienced & trustworthy financial planner who can give you a more holistic advice.
Understand before you buy. It is important to understand the characteristics, terms and conditions of the product we buy. Remember, a product is often ‘mis-sold’ because it is probably ‘mis-bought’ as well.
Respect the calendar. The market doesn’t care when you’ll need money or how much of it you’ll ultimately need. It may take more than five years to reset to the market highs from the last time stocks peaked. If there’s isn’t enough time to wait for the next highs, take today’s high prices as a rewarding opportunity . As they say, a bird in the hand is worth two in the bush.
Use all these tips, and you will have an efficient portfolio that will assure that your money works for you as hard as you worked to earn it in the first place.