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Tata Capital > Blog > Wealth Services > How to Declutter Your Investment Portfolio?

Wealth Services

How to Declutter Your Investment Portfolio?

How to Declutter Your Investment Portfolio?

In the complex world of investments, it's easy for your investment portfolio to get cluttered with a myriad of assets, stocks, and funds. The reason is simple. Over time, as you keep adding new financial goals, your investments keep piling up, too. You might hold on to certain schemes to chase high returns or invest in others to save tax.

But it is good to be picky – especially when it comes to your investments.

A cluttered portfolio can lead to confusion increased risk, and hinder your ability to achieve your financial goals. Not to mention, you lose control over your investments and holding on to underperforming assets can do you more harm than good. This is why it's time to learn the art of decluttering your portfolio.

This article will explore various strategies to help you declutter your portfolio and simplify your investments.

1. Revisit your financial goals

A good investment portfolio is one that is aligned with your financial goals, objectives, and risk tolerance. As your investment goals change with time, so should your portfolio. So, it is important to revisit your financial goals and investment strategies regularly.

Start by scrutinising each investment holding based on its specific objectives. Do these investments still align with your goals? Do you have duplicate investments that focus on the same goal? Or do you have multiple investments in the same asset class and type? Consider these questions and weed out any investments that are not helping the portfolio accomplish its purpose.

2. Review your asset allocation

Given the unpredictable nature of the stock market, the market dynamics are constantly shifting. So, even when you have hand-picked all the investments, the overall asset allocation might stray from your objectives, investment horizon, and risk tolerance over time.

So, as a part of your portfolio decluttering, don't forget to review the asset mix and take corrective measures to rebalance your portfolio. This involves focusing on having a right mix of debt and equity that suits your risk profile and goals.

For instance, you might have started investing to meet a long-term goal of buying a house, in which case, an equity scheme would be suitable for wealth creation over time. And to overcome the risk, you might want to invest in less volatile debt instruments. Thus, rebalancing your portfolio with optimal asset allocation can help you be focused and declutter your portfolio.

3. Consolidate your portfolio 

Another great way to declutter your portfolio is to merge similar investments. Instead of investing in too many schemes with similar portfolio , merge the duplicate ones to fit your goals and risk profile. This will allow you to clean your portfolio and have better control over the management and performance of investments.

4. Eliminate under-performing investments

As you're decluttering your portfolio by reducing the number of investments, don't forget to eliminate the under-performers. Even when your portfolio clearly aligns with your investment goals, certain investments might be consistently underperforming their benchmark and peers.

It's time to identify and eliminate such investments that have not performed well over the past 3 years. This will also help you achieve your desired portfolio allocation and maximise the gains.

5. Keep it simple

Too much of anything is good for nothing, which also applies to your investment portfolio. While it is crucial to diversify your stock investments to mitigate the risk, investing in more schemes than necessary will only make it difficult to manage the performance and efficiency of your portfolio.

To avoid or minimise portfolio cluttering, the key is to keep a simple and minimalistic approach. Consider creating a plan that does not duplicate investments and invest in quality funds that promise decent returns and fulfil the investment purpose.

In the end

When it comes to managing your investment portfolio, it's important to review it regularly to avoid cluttering. Decluttering will help ensure your investments align with your objectives, risk profile, and overall financial goals. But if the decluttering process seems too intimidating, turn to Tata Capital Wealth for professional advice. Explore our best-in-class platform to choose from a range of tailor-made financial products and diversify your portfolio for maximum gains. Get in touch with our experts to manage your portfolio efficiently.

Visit the Tata Capital Wealth website today!

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