How often do I need to make changes to my portfolio?

First things first, as previously highlighted in our DIY Toolkit series, before you start investing you need to think about your goals, how long you are planning to invest your money for and how much risk you can stomach.

Once you have answered these questions and are ready to invest, it is a good idea to start with only a few funds so that you can easily keep an eye on their performance.

In this instalment of the DIY investor toolkit we take a look at how often you need to make changes to your portfolio once you have chosen your funds and trusts. But in short, the answer is: not very often.

Part of the answer to the question comes down to what your initial investment approach was and whether you have selected funds which are long-term strategies, such as diversified multi-asset funds, or if instead you have opted for a much more focused approach by choosing a particular region or sector to invest in.


If it is the latter, then you should be reviewing matters regularly to ensure that you are still invested in the right place because the fortunes or single regions and sectors change frequently.

'Unless you are taking very specific bets, which is usually not the right approach I hasten to add, then checking how [your investments] are doing each month and carrying out a serious review every three to six months, would be appropriate,' says Philippa Gee, managing director at Philippa Gee Wealth Management.

Gee cautions that even with a longer-term approach, you need to monitor your portfolio, so that you can keep an eye on how the funds, the fund managers and also the fund management groups are performing as they will all have an impact on your money.

There are some straightforward techniques you can use to ensure you stay on track, such as stop loss orders you can set with your broker, which means that your investment will be sold if it falls under a certain price.

Charts can offer a useful insight into market sentiment notes Russ Mould, investment director at AJ Bell.

'You need a good reason to go against the prevailing mood if the share price chart goes bottom left to top right or to be a buyer if it is going top left to bottom right. Looking for support and resistance levels can help you determine where to place limit and stop loss orders.'


We have previously explained that the proportion of your portfolio you allocate to distinct asset classes, or certain types of investments, will depend on your investment profile and appetite for risk.

In order to keep these proportions in line you will need to periodically rebalance the mix, to ensure you do not become over-exposed to one portion of the portfolio that has done well and may have become expensive, says Mould.

Alternatively, you may find that you have become underexposed to an asset class that may have done poorly.

Rebalancing helps to keep a more consistent level of risk exposure and also encourages the discipline of selling assets that have risen and buying those that may have fallen and become relatively undervalued.

How frequently you check your portfolio's performance and rebalance will depend on your own personal style and investment time horizon.

Checking the performance once a month or once a quarter seems a sensible precaution but there's no need to check it every day, says Mould. He says this can lead to unnecessary tinkering and increase costs.

A long-term investor should therefore perhaps look at an annual rebalancing, to manage risk while keep trading and dealing costs in check.

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