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How To Check Your Portfolio’s Health In Seven Steps

blog 03 16

As we look forward to an amazing year ahead, this can be a great time to revisit and reflect on your procurement portfolio. Here is a simple 7-point checklist… Check 1: Do you have an emergency fund to tide you through emergencies? The recent covid crisis is a good reminder of the importance of an emergency fund. Salary cuts, Job losses, Medical Expenses, etc can come out of nowhere. Make sure you maintain at least 6-12 months of your Monthly Expenses Safe Debt Fund or Fixed Deposit Check 2: Is your current asset allocation mix in line with your original plan? Given the recent equity market rally, there is a good chance that your equity allocation is much higher than your original planned asset allocation. If your equity allocation exceeds your original asset allocation by more than 5%, it’s a good time to book some profits and realign them back to the original allocation. For Eg: Assume you have a long-term asset allocation of 70% Equity:30% Debt. Right now say if the asset allocation has drifted to 77% Equity:23% Debt, this is a good time to sell some equities (i.e 7% of Total Portfolio) and shift to debt. This will bring back the allocation to the original intended 70% Equity:30% Debt allocation.