Diwali: Review Your Investment Plans And Clean Up Your Financial Portfolio

With Diwali a few days away, now is a good time to review your investment plans and make adjustments for a better financial future. Embrace change, leave behind old strategies, and open the door to future prosperity
Financial Planning, 
Diwali, Financial Planning, Investement

Diwali symbolises light winning over darkness and good over evil. During Diwali, people also pray for wealth and prosperity. This makes it also a good time to take stock of our belongings, keep things that matter, and remove things redundant, including matters pertaining to our finances.

So, here are a few easy steps to help you clean up your home as well as investment portfolio this Diwali.

Realign To Desired Asset Allocation:

One should always analyse one’s asset allocation strategy.

Says Bhuvanaa Shreeram, co-founder and head of financial planning at House of Alpha, a financial planning firm: “During the year changes may have happened in where you invested or even in the markets. Ensure that your asset allocation aligns with your risk tolerance and financial goals. The festive season could be a good time to rebalance and get back on target allocation.”

Some of the important factors to decide the right portfolio mix are the investor’s risk appetite, investment horizon, liquidity needs from the portfolio, costs of rebalancing, such as transaction charges and taxation, etc. Do note that a particular mix of portfolio may not always be ideal throughout the investment journey.

For instance, if an investor has created an equity-debt mix of 80-20 to save up for achieving a 10 years life goal, the portfolio mix should ideally shift more towards debt as the goal comes near. So the portfolio mix in the last year could be 90 per cent debt and 10 per cent equity also.

Consolidate Bank And Investment Accounts:

If you have multiple bank accounts or investments spread across too many mutual funds or folios or shares, consider consolidating them all for better manageability.

People often end up accumulating multiple bank accounts while changing cities or jobs and the old accounts often end up dormant. Says Suhas Harshe, money coach at MoniYogi Suhas Harshe, a financial planning firm: “Go through all bank account statements or passbooks to find out if there are any inactive or dormant accounts with some money lying in them. Close all those accounts by completing the due process and reclaim your money.”

Also check your bank lockers thoroughly to see if there are any important documents lying there regarding any investments or assets.

Reduce Redundancies:

A portfolio that is too much diversified is usually a suboptimal portfolio. Says Shreeram: “Look for overlapping investments within your portfolio and exit them if possible. Redundancies not only reduce returns, they also expose you to unnecessary risk.”

Weed Out Non-Performers:

Check the performance of your investments against their benchmarks. If certain assets have consistently underperformed without the prospect of recovery, it may be time to sell them. Opportunity cost should also not be ignored.

Review Beneficiaries: Festivals are a time for family bonding, thus making it a good moment to review the beneficiaries on your investments and in your Will, to ensure they are up to date. One more way of cleaning up your finances is by updating your nominations in all your financial/legal documents.

Property Documents: Check if you have collected all the original documents of your properties which were purchased by taking the loan and the loan has been completely paid off.

EPF Balance: Many people forget to transfer their Employees’ Provident Fund (EPF) balances while changing jobs. Says Harshe, “Check if any unclaimed amount is lying in your EPF account from the previous employment that you have not transferred or claimed.”

Mutual Funds: Go through either the monthly certified anti-money laundering specialist (CAMS) statement or the various mutual fund (MF) statements to find out if there are any schemes where you had invested some amounts in terms of systematic investment plans (SIP) or for tax savings purposes and have forgotten now. You can redeem these amounts and clean up your mutual fund portfolio.

Stocks: If there are any share certificates in physical form of shares that were purchased before the demat system. Convert them into demat form and encash. The same can be done with dividend cheques.

Old Life Insurance Policies: Search your papers for any old life insurance (LIC) policies where either you have paid all premiums but not taken the maturity amounts, or it was a limited premium plan and you have forgotten the maturity date. Encash them. You could also go through old LIC policies either endowment/moneyback which were taken years back and simply forgotten. You can surrender them and encash the surrender value.

Other Investments: Check if there are any Kisan Vikas Patra, National Savings Certificates or any other tax savings bonds taken years ago and which you have not encashed.

Set Fresh Goals For The New Year: Reflect on your financial journey and set new goals for the upcoming year. Diwali’s spirit of renewal can inspire fresh financial goals and actions.

Seek Professional Advice: If you are unsure about making these changes, consult with a financial advisor who can provide customised advice.

Diwali is an opportunity to declutter not just our physical space, but also our minds. Letting go of unnecessary stuff creates space for what truly matters: meaningful connections, personal growth, and a closer alignment with our values. The same idea applies to our financial investments. A wise and careful selection is key to having a balanced connection with our possessions.

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