A portfolio review is a once-a-year check that your investments still fit your goals. Go through ten checks: your goals, emergency fund, asset mix, overlap between funds, performance against a benchmark, downside risk, quality, costs and taxes, new contributions, and a final decision for each holding.
A good portfolio review ends with a clear next step. If your mix has drifted, fix it with new money first and sell last, after checking tax. Change an investment when your goal or the investment itself has changed, not because of one weak year.
Want these ten checks run on your own investments?
Most of a review is collecting numbers from several statements. AI CFO, the financial assistant in the 1% Club app, can do that part from the accounts and assets you have linked or added, including your asset mix, fund overlap, costs and tax position.
Try asking: “Review my portfolio: asset mix, overlap, costs, tax and how far it has fallen in bad phases.” AI CFO explains what it finds. It does not tell you what to buy or sell. If you would rather learn the method first, every check below works with your statements and a simple sheet.
Table of Contents
Why do a portfolio review when you already invest?
If you invest through SIPs, it is easy to open the app, glance at the returns and close it again. Returns alone do not tell you whether your money is on track for what you want, such as a home, your children’s education or retirement.
A portfolio review answers that. It is a calm, periodic look at everything you own, measured against your goals, the loss you can live with, what you pay in costs and what you owe in tax. A portfolio review is different from checking prices, and different from rebalancing, which is only one possible result of a review. A review can end with “no change needed”, and that is a good outcome.
What is a portfolio review?
An investment portfolio review is a check of all your holdings, together, against your plan. It covers mutual funds, shares, ETFs, NPS, EPF, PPF, gold and anything else you own. The aim is not to find last year’s best performer. The aim is to confirm that your money is spread sensibly, costs are fair, tax is understood, and every investment still has a job to do.
When should you review your portfolio?
Once a year is a sensible habit. Year-end, or just after the financial year closes, works well because your gains and tax position are fresh. It is also worth a portfolio review when something real changes:
- You set a new goal, or an old one moves
- Your income or expenses change
- You receive a bonus or a lump sum
- A fund changes its manager or its approach
- Your investment mix has drifted noticeably from your plan
Looking at prices every day is not a portfolio review, and can make it harder to stay with your plan.
What to keep ready before your portfolio review
Gather your mutual fund statements, your demat holdings, and your NPS, EPF, PPF, fixed deposit and gold details in one place. Add your goals with rough amounts and dates, and your monthly expenses. A single sheet is enough for a portfolio review.
The Ten checks at a glance
| # | Check | The question to ask |
|---|---|---|
| 1 | Goals | Does every investment have a goal and a date? |
| 2 | Emergency fund | Do I have enough easy-to-reach cash? |
| 3 | Asset mix | Does my split between equity, debt and gold match my plan? |
| 4 | Overlap | Do my funds and shares repeat the same companies? |
| 5 | Benchmarks | Is each holding keeping up with its benchmark and peers? |
| 6 | Downside | How far has it fallen, and could I sit through that? |
| 7 | Quality | Is each holding still what I bought it to be? |
| 8 | Costs and tax | What do I pay each year, and what would selling cost? |
| 9 | SIPs and rebalancing | Is new money going where it should? |
| 10 | Decisions | What will I do with each holding? |
Step 1: Start your portfolio review with goals, not returns
1. Match each investment to a goal
Every portfolio review starts with your goals. For each goal, note what it costs in today’s money, how many years away it is and how much you have set aside. Then match every investment to one goal. A fund that suits a goal 15 years away may not suit one that is two years away, because money needed soon has less time to recover from a fall. If a holding has no goal, ask yourself why you own it.
A common rule of thumb is that money needed within three years should lean towards stability, while money needed in seven years or more can lean towards growth. If you are still setting goals, our guide to goal-based investing is a good place to begin. These are general guidelines, not advice for your situation.
2. Check your Emergency Fund
A portfolio review is only as sound as the cash behind it, so look there before judging your long-term investments. A common guideline is to keep three to six months of expenses in an easily accessible place, and more if your income varies. The right amount depends on your situation. If your emergency money sits in equity, a market fall could force you to sell at a poor time.
Our guide on how much emergency fund you need explains how to size it.
Step 2: See what you actually own
3. Look at your asset mix
In any portfolio review, asset allocation comes first. It means how your money is split between equity, debt, gold and other assets, and it has a big influence on how bumpy the ride feels. Count everything, including EPF, PPF and NPS.
As an example, suppose your plan is 60% equity, 30% debt and 10% gold, and after a strong year for shares, your mix looks like this:
| Asset | Your plan | Today |
|---|---|---|
| Equity | 60% | 72% |
| Debt | 30% | 21% |
| Gold | 10% | 7% |
These numbers are only an example to show what drift looks like, not a suggested split. Your plan will be your own and may look quite different.
In this example, the portfolio now carries more equity risk than its owner planned. A common rule of thumb is to look closely when the mix drifts about five percentage points from your plan. It is a guideline, not a rule, and the right limit depends on you. Your own target should depend on your goals and how much loss you can live with, not on a fixed formula.
Ask AI CFO: “What is my current split between equity, debt and gold, and how far is it from my plan?”
4. Check for overlap
Overlap is one of the most useful things a portfolio review can show you. Owning several funds does not always mean your money is spread out. Two funds can hold many of the same companies, and you may own some of those companies directly as well.
Looking through your funds shows how much of your money depends on a single company, sector or theme. Decide in advance how much you are comfortable having in any one company, and write it down. Our guides on how many mutual funds to hold and diversification go deeper.
Ask AI CFO: “How much do my mutual funds overlap with each other and with the shares I own?”
Step 3: Judge how it is doing
5. Compare with the right benchmark
In a portfolio review, compare each fund with its benchmark index and with similar funds, over three and five years rather than one. A single year can flatter or punish a fund by chance. For SIPs, use XIRR, which accounts for the different dates of each instalment. Our explainer on CAGR, XIRR and rolling returns shows how they differ.
Also judge your whole portfolio fairly. A portfolio that is 60% equity should not be measured against an equity-only index in a year when shares rose sharply. Compare it with something that resembles your own mix.
6. Look at the downside
Returns are only half the picture in a portfolio review. Look at how far each holding fell in bad phases and how long it took to recover. This is called drawdown. Losses are harder to recover than they look: after a 30% fall, you need a gain of about 43% to get back to where you started.
Ask yourself whether you could hold your portfolio through a fall like that without selling. If the honest answer is no, your mix may be riskier than you are comfortable with. Measures such as the Sharpe ratio compare the return a fund earned with the risk it took, and are a useful second view.
7. Check the quality of each holding
For a mutual fund, your portfolio review should check whether it has been consistent against similar funds, whether it still follows the approach it describes, and whether anything big has changed, such as the fund manager.
For a share, look at the health of the business and your original reason for buying. When you buy, write one line: “I own this because…”. At each portfolio review, ask whether that is still true. If the reason has gone, the holding needs a decision. If only the price has moved, it may not.
Step 4: Count what it costs to hold and to sell
8. Review costs and tax
Costs and tax belong in every portfolio review. Every mutual fund charges a yearly cost called the expense ratio, and some charge an exit load if you sell early. Direct plans usually cost less than regular plans. A small difference adds up. As an illustration, assume a steady 12% a year (real returns will vary): one extra percentage point of yearly cost leaves you with roughly 13% less after 15 years. It shows how costs compound and is not a forecast.
Tax is the other cost, so check it before you sell. For FY 2026-27, equity mutual funds and listed shares are taxed as follows:
- Sold within 12 months: gains are taxed at 20%.
- Sold after 12 months: gains are taxed at 12.5%, but only on the part above ₹1.25 lakh in the financial year.
Cess is added on top, and other types of funds follow different rules. Sometimes waiting a few weeks to cross the 12-month mark changes the tax, but tax should not be the only reason to hold or sell. A chartered accountant can confirm what applies to you, and our guide to mutual fund taxation in India explains the rules in more detail.
Ask AI CFO: “Which of my mutual fund units turn long-term soon, and what exit load would I pay if I sold today?”
Step 5: Finish your portfolio review with decisions
9. Review your SIPs and rebalance gently
A portfolio review is also the right time to look at your SIPs. Check that every SIP still matches a goal and that none is feeding a fund you plan to drop. If your income has grown, consider raising your SIPs a little each year.
If your mix has drifted, the gentlest fix is to send new money and SIPs to the part that is below plan. In the earlier example, if you add enough new money to debt and gold, the portfolio can return towards its plan without selling anything. Sell only if the drift is large, and check tax and exit load first.
10. Write your decisions down
A portfolio review that ends without decisions is only a report. Give each holding one of five labels, and write the reason in a line:
- Continue: your goal, your risk and the investment are unchanged, so carry on as planned.
- Monitor: it is fine for now, but something is worth watching, such as a recent dip in performance.
- Rebalance: your mix has drifted beyond the limit you chose.
- Investigate further: something has changed, such as the manager, the approach or your reason for owning it.
- Review with a professional: the decision involves a large amount, complex tax or a situation you are unsure about.
Avoid selling only because a fund had a weak year. Recent returns can pull hard on your judgement. This habit, called recency bias, is a common reason investors buy after a rise and sell after a fall. Act when your goal, your risk level or the investment itself has changed. Finish by putting next year’s portfolio review date in your calendar.
How AI CFO can help with your portfolio review
The 10 checks of a portfolio review draw on data from many places. AI CFO is a financial assistant in the 1% Club App. It works from the accounts and assets you have linked or recorded, tells you where its data is incomplete, and shows its calculations and assumptions. It explains what it finds. It does not tell you what to buy or sell.
| Sr. No. | Check | What AI CFO can do |
|---|---|---|
| 1 | Goals | Reviews your FIRE status, goals, target amounts and timelines, and how each goal affects your plan |
| 2 | Emergency fund | Looks at your cash flow, monthly expenses, bank balances and runway, and compares options for parking the money, including tax |
| 3 | Asset mix | Shows your split across mutual funds, shares, ETFs, NPS, gold, cash and manually tracked assets, and flags drift |
| 4 | Overlap | Spots overexposure to single stocks, sectors and asset classes, and overlapping mutual funds |
| 5 | Benchmarks | Compares your funds and your whole portfolio with relevant benchmarks and similar funds |
| 6 | Downside | Reviews drawdowns, risk-adjusted measures and volatility where data is available |
| 7 | Quality | Explains the published scorecard for specific funds, and analyses specific shares and ETFs using available market data |
| 8 | Costs and tax | Reviews expense ratios, portfolio costs, exit loads and your capital gains position. Tax conclusions may need your tax regime, residency and slab rate |
| 9 | SIPs and rebalancing | Reviews your active SIPs, contribution patterns and drift, and the options for rebalancing |
| 10 | Decisions | Sorts findings into monitor, continue, rebalance, investigate, or review with a professional |
AI CFO cannot guarantee returns or predict markets, and it does not replace a SEBI-registered investment adviser or a chartered accountant. It will tell you when a conclusion needs a professional to check it. Try an AI CFO portfolio review in the app
Your next step
Pick a date this week, gather your statements and work through the ten checks of your portfolio review in order. Write one decision for each holding and set your next review date. If you would rather start from your own numbers, Ask AI CFO to run the portfolio review.
This article is for education and is not personalised investment advice. Mutual fund investments are subject to market risks, and past performance does not guarantee future returns. Consider speaking to a SEBI-registered investment adviser or a chartered accountant before acting on tax or large investment decisions.
FAQs
Is a portfolio review needed if my investments are doing well?
Yes. Good recent returns do not show whether your mix, costs and risk still fit your goals. A portfolio review also shows whether a strong year has left you holding more equity than you planned.
How often should I do a portfolio review?
Once a year is a good habit, ideally at year-end or after the financial year closes. Do a portfolio review sooner if a goal, your income or your family situation changes, if you receive a large sum, or if your mix has drifted well away from your plan.
How do I review my mutual fund portfolio?
In a portfolio review of your mutual funds, list every fund, match each to a goal, and compare it with its benchmark and similar funds over three and five years. Check overlap between funds, look at what you pay in costs, and find out what tax a sale would trigger. Then give each fund one decision.
When should I rebalance my portfolio?
When your mix moves beyond a limit you set in advance, or once a year, whichever you prefer. A common rule of thumb is a drift of about five percentage points. Start with new money and SIPs, and sell only if the drift is large.
Should I sell a fund that did badly this year?
Not automatically. Let your portfolio review decide, not the latest headline. Look at three to five years, at similar funds, and at whether the manager or approach has changed. Sell when the fund no longer fits your goal or has changed, not because of one weak year.
What is the tax on selling equity mutual funds in FY 2026-27?
Gains on units sold within 12 months are taxed at 20%. Gains on units held longer are taxed at 12.5% on the portion above ₹1.25 lakh in the financial year, and cess applies on top. Other types of funds are taxed differently, so check during your portfolio review before you sell.
