Mutual funds are a popular choice among investors. Mutual funds are professionally managed funds that not only diversify the risk but also provide consistent long term returns. Mutual funds are available in various types as per the risk appetite of the investor. These reasons contribute to why a large number of retail investors choose mutual funds as their go-to asset class.
However, since the mutual funds are professionally managed should you invest and forget? Absolutely not. Let’s understand what is the right time to reshuffle/review your SIP investments.

1. Change in financial goals

Financial goals are dependent on your stage of life. When you are young and single, your goal might be to buy a nice bike or car for yourself or perhaps fund your post-graduation. As you grow up, financial goals change. Someone who is married might want to invest in their children’s education or buy a house. Since financial investments are primarily done to meet our financial goals. It is important that we review or reshuffle our financial investments as per our change in financial goals. 

2. Low performance of funds

Sometimes it may happen that the SIP that we invest in may not reap us good returns even over the long term. Your fund may give you comparatively lesser returns when compared to other funds or may even give you negative funds. It is crucial to take a decision at this point and consider reshuffling your SIP investments. Holding on to non-performing mutual funds in the hope of them performing well later is a bad idea. The opportunity cost is high. Hence, you must review and reshuffle your investments.

3. To alter your investment amount

In your investment journey, you will come across various bullish and bearish cycles. To take maximum benefit of such uncertainties in the market, you may consider reviewing your SIP investments. Slowly in a phased manner increasing your investments during a bull run can give you higher returns than what you might actually get. Alternatively, in times of a corona wave, a war or some natural calamity, you may choose to review your investment.

4. To save tax

There are some mutual fund schemes that help you in saving tax. An equity-linked saving scheme or an ELSS mutual fund offers a tax rebate under Section 80C of the Income Tax Act, 1961. Hence, with time as your salary grows, you might want to consider saving more tax. In that case, you might need to allocate a higher proportion of your investments to ELSS schemes. 

This move will help you get good returns over the long term and even help in saving tax.

Conclusion 

Like any other decision, the decision of when to reshuffle and review your SIP investments require careful planning. Make sure to be aware of your financial goals and accordingly figure out when and how to reshuffle your SIP investments. 

Winston Churchill said, “One who fails to plan, plans to fail.” Plan your goals and investments well and you will surely get good returns on your SIP investments.

Related Aritcles:

How to Analyse Mutual Funds for Big Returns | Things to Know Before Investing in Mutual Funds | Mutual Fund - Need of Financial Plan | How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account