Diwali: revise plans, clean up financial portfolio

Diwali symbolizes the victory of light over darkness and good over evil. During Diwali, people also pray for welfare and prosperity. It's also a great time to evaluate our belongings, keep what matters, and get rid of unnecessary things, including anything related to finances. So, here are some simple steps to help you get your home and investment portfolio in order during Diwali.

Tailor your desired asset allocation:

You should always analyze your asset allocation strategy. As Bhuvana Shreeram, co-founder and head of financial planning at House of Alpha, a financial planning firm, says, "Over the course of a year, there could have been changes in where you invested''or even in the markets. Make sure your asset allocation is in line with your risk tolerance and financial goals. The holiday season can be a good time to rebalance and get back to your target allocation." Some of the important factors for determining the right portfolio mix are an investor's risk appetite, investment outlook, liquidity needs from the portfolio, rebalancing concerns such as transaction fees and taxation, etc. It should be noted that a particular portfolio mix is not always ideal throughout the investment journey. For example, if an investor has created an 80-20 mix of stocks and bonds to achieve a 10-year life goal, the portfolio mix should perfectly''match bonds as the target is approaching. So the portfolio mix in the final year could be 90 percent bonds and 10 percent stocks.

Combine bank and investment accounts:

If you have multiple bank accounts or investments scattered across multiple investment funds or stocks, consider combining them for easy management. People often accumulate multiple bank accounts when they change cities or jobs and the old accounts remain dormant.

Reduce redundancy:

An overly diverse portfolio is usually a suboptimal portfolio. As Schreeram says, "Look for overlapping investments in your portfolio and get out of them if possible. Excesses not only reduce returns, but also expose you to unnecessary risk. "

Get rid of underperforming instruments:

Check the performance of your investments against their benchmarks. If certain assets are systematically failing to produce results and don't have''says Harshe, "Check if there is any unutilized amount lying in your EPF account from previous employment that you have not transferred or requested'.

Investment funds:

Check your monthly certified anti-money laundering specialist (CAMS) or various mutual fund (MF) reports to see if there are any schemes in which you have invested some amounts as systematic investment plans (SIPs) or for tax savings and have now forgotten. You can withdraw these amounts and clear your mutual fund portfolio.

Actions:

If you have stock certificates in physical stock form that were purchased before the introduction of the depot system, convert them to dematerialized form and''new goals for the coming year:

Think about your financial journey and set new goals for the coming year. The spirit of Diwali can inspire you to create new financial goals and actions.

Get professional counseling:

If you are unsure how to make these changes, consult with a financial advisor who can provide customized advice.

Diwali is an opportunity to not only clear our physical space, but also our minds. Giving up unnecessary things creates space for what really matters: meaningful connections, personal growth, and a deeper alignment with our values. The same idea applies to our financial investments. Wise and mindful''choice is the key to balancing our holdings.