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Are your investments in line with your goals? Find out

The past year has been challenging for many but it has also helped people realize the importance of having the right investment in place. Industry experts say, once a year investors should take time to look at their finances.

Gaurav Awasthi, Senior Partner, IIFL Wealth says, “Investors need to revisit their financial goals and asset allocation to assess whether they are in line with what they had set out to achieve. It’s pertinent to check your return assumptions and reflect if they are realistic.”

For instance, industry experts say in the current low-interest-rate environment, instead of assuming 8 per cent returns, it would more realistic to bring that band to 5 per cent to 6 per cent.

AMFI, Chief Executive, NS Venkatesh says, “Asset allocation is the key to financial planning. One should review that the current asset allocation is in line with one’s risk profile and life-stage. Review your investment portfolio as there could be a need to churn some non-performing investments, add some new themes of investments and to align the overall portfolio with your asset allocation.”

Asset allocation should be done not just factoring in current valuations and not just historical expected returns. Awasthi says, “If your long-term goals are likely to be met with 60 per cent equity allocation assuming 12 per cent expected to return in equity, it does not mean you simply allocate 60 per cent to equity. You need to factor in the current expected returns, possible downside and your ability to withstand volatility.”

Additionally, experts suggest that if one wishes to avoid getting exposed to deep downsides and volatility then active asset allocation may be more appropriate than passive allocation strategies, which may turn out to be more volatile.

DP Singh, Chief Business Officer, SBI Mutual Fund, “One should ensure that he/she is invested at all times and that the investments continue regularly as per their financial plan. This will ensure good financial discipline and also help generate wealth over the long-term through the power of compounding.”

Experts suggest, whenever one purchases an asset which depreciates over time, such as a car, one should target to invest a similar amount in an appreciating wealth-creating asset such as equity, fixed income, gold, among others in one’s portfolio. This will help in replenishing one’s overall portfolio.

Lastly, experts say one should also evaluate their risk coverage not just from an insurance point of view but also factor in a reasonable sustenance kitty and ensure adequate cash flows to mitigate any financial stress.

Also, while investing is important, it is also necessary to keep an eye on protection through insurance. Venkatesh says “One should review if they are sufficiently covered, as overtime, individuals do rise up the career ladder and also add more members to the family.”


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Financial Express