Gold in a portfolio has nearly tripled: should they book profit, and how often should one actually be making changes?

A successful portfolio review often results in no changes at all, as resisting the urge to act is one of the most valuable habits an investor can build.

In investing, everybody feels they know something and that luck is on their side, which quietly creates friction at every step. If I had to summarise all common mistakes into one, it would be overactivity. In any area of life, that tends to hurt more than almost anything else.

One of the most common beliefs is that something which has made money must now fall. When gold has been included as a planned part of a portfolio and it triples, the client often just wants to exit and book profit. But the question is not whether it went up, but whether its role in your structure has changed and if its weight has drifted far beyond what your plan intended.

Gold is a hedge, insurance for very volatile periods, and a long-term value preserver. Selling all of it removes that protection just because it did its job well. If review means action to you, you will often be disappointed, because review actually means taking a critical, honest look at the full structure of your wealth.

It is like your annual health check-up where you hope nothing needs changing, but if something does, you catch it early. Three things keep acting on your wealth: markets keep changing, your own life circumstances keep changing, and the view of how your structure should evolve may change. A review checks all three without necessarily meaning you have to trade.

Rebalancing pushes you into action, which suits an algorithm inside a mutual fund where there is no tax or friction on each move. For an individual, every sale can trigger tax and costs, so it helps to be thoughtful rather than mechanical. Good clients over time actually feel happy when a review leads to no change.

A quarterly review is standard practice and good enough for most people, while reviewing less often than annually is too little. Consider dropping the daily checking, sitting down once a quarter, and asking only whether gold's weight is far off your intended allocation. If it is, a partial trim can bring it back without throwing away its role.

Also keep in mind that trading is not just intraday. Buying something hoping it reaches a certain price, even over 5yr, is still trading. Staying alert without being overactive is the balance to aim for.

Based on Himanshu's podcast with Sachin: https://foliyo.ai/blog/investing-isnt-enough-managing-your-wealth/
Disclaimer: All information shared above are strictly for educational and informational purposes only. It should not be construed as financial or investment advice.