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Annual Investment Review: How to Conduct One and What to Take Away from It
Key takeaways
- An annual review is about decisions and habits, not just returns.
- A properly conducted review reveals whether your portfolio still matches your goals.
- Year-end rebalancing is a natural opportunity to return the portfolio to its intended allocation.
- Evaluating return alone without a benchmark comparison is pointless.
- A review also reveals behavioural mistakes — panic sells, euphoric buys.
Year-end is not an occasion to look at performance numbers and compare them to last year. It's an opportunity to ask a deeper question: am I doing things correctly, or am I just reacting to what's happening in markets?
What belongs in a review
A good annual investment review is not an account statement — it is a structured overview of decisions. Try to answer four questions:
- Did I contribute to the portfolio as much as I planned? If not, why not?
- Did I sell or buy something I hadn't planned — and if so, why?
- Does the portfolio allocation still match my goals and time horizon?
- What was my return compared to the relevant benchmark?
Benchmark comparison — why it matters
Saying "my portfolio grew seven percent this year" conveys no information without context. If the global index grew fifteen percent, seven percent is a bad result. If the index fell ten percent, seven percent is an excellent result. Always compare with the relevant benchmark — for an equity portfolio, MSCI World or FTSE All-World.
Rebalancing as part of the review
Year-end is a natural moment for rebalancing — returning the portfolio to its originally planned allocation. If equity ETFs grew significantly and bonds lagged, the proportions have shifted. Rebalancing is a mechanical correction, not speculation.
Behavioural audit — the most valuable part of a review
Ask yourself: did I sell in a year when markets were falling? Did I buy when the media reported a crisis? Or the opposite? Behavioural mistakes are more expensive than poor fund selection. Identifying and naming them at year-end is prevention for the year ahead.
For general guidance on building and managing a portfolio, read how to build a first portfolio.
FAQ
How do I conduct an annual investment review?
Answer four questions: Did I contribute as planned? Did I make unplanned decisions? Does the portfolio allocation match my goals? What was my return vs. the benchmark?
What is a benchmark and why do I need it?
A benchmark is a comparison index — typically MSCI World or FTSE All-World. Without a comparison you don't know whether your result was good or bad. An absolute number without context says nothing.
Do I have to rebalance at year-end?
You don't have to, but it's a good opportunity. Rebalancing returns the portfolio to its planned allocation. Consider the tax impact — topping up underweight positions is more tax-efficient than selling surplus ones.
What are behavioural mistakes in a portfolio?
Panic selling during a decline, buying in euphoria at the peak, excessive trading. A behavioural audit at year-end helps identify them and avoid them the following year.