INVESTMENT CLINIC

I OFTEN read that I should review my investments regularly. But exactly how often should I do this and what should I look out for?

AS A rule of thumb, you should sift through your investment choices at least once a year.

The first thing you want to check is how your funds have performed.

A good measure of performance is how a fund has fared in comparison to the benchmark it measures itself against.

For example, this might be the FTSE All Share index. Good funds regularly beat their index, although few funds do this every year.

Another important thing to check is how much you’ve earned in dividends. This is particularly important if you’re retired and are relying on investments to provide income in retirement.

If you get 4p for every £1 invested then you’re doing pretty well.

The next thing to consider is if the mix of your investments has changed. You may have started off with a portfolio split 50/50 between share funds and bonds. But that might change to 60/40 throughout the year as one performs better than the other.

While it’s good that your share picks are doing well, consider if you are happy with the new mix.

If you’re not, you’ll need to sell some of your holding in the investment that has performed well and redistribute the money elsewhere.

Selling an investment that has done well might sound counterintuitive, but remember there was a reason you set up your portfolio the way you did in the first place.

You should also consider whether your attitude to risk has changed.

That racy emerging markets fund may have been perfect for you in your 20s and 30s, but may not be in tune with the amount of risk as you approach retirement.

Between each yearly review you might also keep an eye on things every few months. But refrain from tweaking your portfolio too often.

If you did your homework at the start, and you believe in your fund choices, then you should give them time to prove themselves.

SeND questions to: Investment Clinic, Money Mail, Northcliffe House, London W8 5TT.