Based on this, we recommended our investors with ongoing SIPs to update their SIPs to the latest recommendations.
We also recommended all investors to use our one-click Portfolio Rebalancing feature to move their existing investments to the new funds (exit load free amount only).
One common concern that some investors initially had was this -
"Currently my Goalwise account is suggesting that I Rebalance Portfolio for my Retirement goal. However, I would be booking a loss of [Rs X] if I go ahead with this transaction.
Is it really advisable to rebalance portfolio by booking a loss?
Shouldn't I wait for the investments to come up and then rebalance?"
Yes, it is advisable to rebalance portfolio even by booking a loss. (Note however that we advise rebalancing only the exit load free part of the portfolio).
First of all, the loss is there whether you rebalance or not. Sometimes investors think that this is just paper loss and the actual loss happens only when you sell it, but that's true only from a taxation point of view.
For all other purposes, the current value of your investments is what your investment is actually worth today and not the amount that you invested.
Now, when we update the list of recommended funds based on the latest data, the sole reason of doing so is that we expect the new funds to perform relatively better than the old funds.
No one knows the future, but this is what we expect to happen on average because this is what our studies have shown to happen in the past.
Hence, Rs 100 in new funds is expected to do somewhat better than Rs 100 in old funds (irrespective of the fact that that Rs 100 was originally Rs 110 or Rs 90).
Holding on to the old investments just because they are below the price at which you bought them originally is not very rational (in fact this is a well documented flaw in investing behaviour known as disposition effect).
These investments may come up in future but in that case, the new funds are expected to come up even more thereby getting you higher returns.
So go ahead and rebalance your portfolios in just a click!