How to review your portfolio once a year

Most portfolios do not fail through one bad decision. They drift: a fund bought on a tip, an allocation that tilts after a strong year, a SIP that never grew with income, a nominee who was never added. One unhurried review a year catches most of this. Here is a routine that takes an afternoon.

Step 1: Pick a date and protect it

Choose a date you will remember — the start of the financial year, a birthday, an anniversary — and block a few hours. A fixed date separates the review from market noise and makes it a habit.

Step 2: Gather your statements

• a consolidated account statement covering your mutual funds across fund houses
• demat statements for shares, bonds and ETFs
• deposit and bond details: amounts, rates, maturity dates
• provident fund and NPS statements
• insurance policy schedules
• last year's capital gains statements, for tax

Step 3: Update your net worth

Enter current values in the Wealth Lab and compare with last year. Did net worth grow because you saved more, because markets rose, or both? Did any debt grow unexpectedly? The trend matters more than any single figure.

Step 4: Measure returns properly

For SIPs and irregular investments, XIRR is the right measure, because it accounts for the timing of each instalment; simple percentage gains mislead. Our explainer on CAGR vs XIRR shows why.

Then compare each fund with its benchmark and category over three and five years where available, not just the last twelve months. One weak year is not, by itself, a reason to sell.

Step 5: Check your allocation and rebalance

Compare your current mix of equity, debt and other assets with your target for each goal. If it has drifted meaningfully — say, by more than five percentage points — bring it back. Direct new SIPs or lump sums to the underweight asset first, and sell only if needed, keeping exit loads and capital gains tax in mind. See asset allocation and rebalancing.

Step 6: Cut clutter and overlap

Run your funds through the Portfolio X-Ray. Look for:

• several funds in the same category doing the same job
• heavy overlap in underlying holdings
• small, forgotten positions that add complexity without changing outcomes

A focused set of funds, each with a clear role, is easier to monitor and to stick with.

Step 7: Review each holding against its role

For each fund, ask: is it still doing the job I bought it for?

• Has its strategy, category or portfolio style changed? Compare this year's factsheet with last year's.
• Has the fund manager changed?
• Is its cost reasonable for what it delivers?
• Has it lagged its benchmark and category consistently over several years, not just one?

Note concerns, but act deliberately. Switching has costs — tax, exit loads and a fresh holding period — and chasing last year's top performer rarely helps.

Step 8: Revisit goals and contributions

Update each goal's cost, date and progress. If income has risen, consider a step-up. If a goal is now within three to five years, start shifting its money towards lower-volatility options.

Step 9: Check protection and paperwork

• Is life cover still adequate after changes in income, family or loans? See how much term cover is enough.
• Does health cover still fit the family's needs?
• Are nominations in place and current on every account and policy? Use our nominations checklist.
• Is your KYC status still valid, and are your contact details current?
• Do you have last year's capital gains and interest statements ready for filing?

Record the review

A one-page record makes next year's review faster and shows how your finances have evolved. If you would like a second pair of eyes, book a consultation and bring this page with you.