How Often Should You Review Your Investment Portfolio?

Once you’ve bought your investment property or your portfolio of shares, should you just kick back in a lounge chair with a cocktail in one hand and your feet on a stool while you wait for the cash to roll in?

The Australian Securities and investments Commission (ASIC) says definitely not. “Things change, so review your plans regularly,” is their advice, so you can see signs of underperforming or failing investments, jettison or acquire new assets, and review how you’re positioned to manage the losses that may occur.

But how regular is “regularly”?

That depends on the type of investment and how long you’ve held it.

If you have a specific strategy for your share portfolio, you might check daily price movements to see whether your strategy outline says it’s time to either sell off or buy more of a particular group of shares.

Property portfolios require a different approach. Real estate is intended to be a long-term proposition of ten or more years.

For individual property assets, a review in the first year should examine cash flow, to ensure rental income and any expenses are paying the mortgage off at a reasonable rate for you to achieve long term capital growth. After that, the first asset review to ensure the investment is operating as expected should be 3 to 5 years after purchase. It takes around that long to tell whether prices in that location are moving consistently in either direction.

Although individual assets have that long term view, it’s wise to review the overall portfolio every six months, to see which assets are due for a three-year analysis. A six-monthly evaluation might allow you to see where valuations in the market have changed and to assess whether you’re in a good position to invest in another property for your portfolio.

Be aware of what types of investments you have and instigate a suitable review cycle to keep those assets on track. Then take the time to put up your feet and have that cocktail as a reward, until the next cycle.