Tips To Restructure Your Financial Portfolio

Introduction: The Indian HNI & UHNI Landscape

In the last few years, the volatility has disrupted the economies and the pockets of individuals, including the HNIs and ultra-rich families. Despite earning good, the survey says 40% of the HNI category in India has experienced low portfolio growth due to overexposure to underperforming assets. Even though they own massive wealth, 43% of them are saving less than 20% of their post-tax income, which means they are struggling with their finances as well.

Plus, it is unexpected that 21% of them lack the financial understanding to build a portfolio. If these insights continue to grow, high-net-worth individuals may experience adverse effects on their investments before retirement. But what's the solution?

Well, get your answer in this blog as you explore portfolio restructuring tips and how to construct a financial portfolio effectively. Keep reading to find out more!

What Is Portfolio Restructuring: Why It Is Important For HNIs and UHNIs

Maintaining an HNI's portfolio is not just an invest-and-forget process. Like a car needs regular maintenance and repair, even investments experience a similar turmoil in the market. And this impact can be greater if the amount invested is massive. In such situations, this market shift also demands portfolio restructuring at certain periods.

In simple terms, Portfolio Restructuring is the strategic adjustment of a portfolio's composition to better align with an investor's goals, risk tolerance, and market conditions. It redirects investments into the portfolio in a way where assets are again reallocated, risk exposure is modified, and the rest portfolio holdings are rebalanced. So, if the manager feels the current mix is outdated, they may even suggest selling the investments.

Some other reasons include;

• Protection against market downside
• Capturing new market opportunities
• Optimizing portfolio from a taxation perspective
• Experiencing a new shift in personal events (like marriage, childbirth, retirement, etc.)

For example:

A 43-year-old HNI is planning to send his son abroad for education. Currently, he has an investment worth ₹7-10 crore, but now he feels he may require more funds. As a result, he asked his portfolio manager to reconsider his portfolio in a way that would fulfill his son's educational requirements. Thus, the portfolio manager re-evaluated his portfolio and gave some useful portfolio construction tips as well.

Tips To Restructure & Build Your Financial Portfolio

The following portfolio construction tips can rebuild your financial portfolio in a better manner:

Tips	Explanation
Clarity About Financial Goals	The foremost step for HNIs and UHNIs is to be clear about their financial goals. While they are subject to change, reviewing and using them as a guide for investment decisions is beneficial. It helps the portfolio manager understand and absorb them to restructure the portfolio accordingly. Once achieved, realign and set new goals.
Diversification Is The Need	Not all eggs in one basket are fruitful. Having a diversified portfolio brings the nectar of different assets in one place. With more than ₹5 crore at stake, putting all funds in just one asset is risky. A mix of equities, bonds, real estate, gold, and other assets (like AIFs, hedge funds, and private equity funds) balances overall yield, even in volatile markets.
Strategic Asset Allocation	Asset allocation depends on an individual's risk appetite. The asset mix at the investor level differs. The amount of risk a HNI is comfortable with must match the potential yield. For example, certain debt exposure, long-maturity equities, and commodity-based investments can be considered based on comfort level.
Decide On The Investment Period	Adopting a long-term investment approach helps smooth out short-term market volatility and keeps the portfolio aligned with financial goals, managing risk more effectively.
Consider Tax Planning And Insurance Benefits	Each year’s budget offers tax benefits for HNIs and UHNIs, including insurance policies. Use related tax incentives to minimize outflows—like Section 80C, which offers up to ₹1.5 lakhs tax deduction on insurance premiums.
Indulging In Personal Finance And Education	As markets evolve, staying informed about trends and regulatory changes is vital. Familiarity with new investment products helps you make better decisions and creates opportunities to diversify and strengthen your portfolio.
Track the Market and Technicals	Decisions based on fear, greed, or short-term market news can lead to impulsive mistakes - like buying high during a bull run and selling low in market crashes. Stick to long-term goals and strategies to avoid emotional disruption.
Watch For Debt And Existing Loans	Before allocating new investments, check how much income is tied up in debt repayments. For example, using a 50-50 debt strategy to pay off high-interest loans (like credit card debt) before investing aggressively.
Regular Review And Restructuring	Market changes and evolving financial goals make periodic portfolio reviews important—at least once or twice a year. Rebalancing ensures asset allocation remains aligned with goals and risk tolerance, replacing underperforming assets or shifting to safer options as you age.
Consult A Professional	Even seasoned investors can benefit from a professional perspective. This consultation adds a layer of expertise, suggesting strategies to enhance portfolios, regardless of whether you are an HNI or UHNI.

Final Thoughts

Restructuring a financial portfolio for HNIs and UHNIs is an ongoing journey - aligning investments with their goals, risk tolerance, and life events. By staying disciplined, diversifying smartly, and reviewing your investments regularly, one can rebuild a portfolio that grows wealth and withstands market ups and downs. If you wish to realign your investments as per your goals, consult a portfolio restructuring professional today.

Disclaimer: The information, illustrations, and calculations provided in this blog are for general informational purposes only and should not be construed as investment advice or a recommendation to buy, sell, or hold any financial product. All examples and figures are purely illustrative and may be based on assumptions that can change over time. Actual results may vary and are subject to market risks and other factors. Readers are advised to independently verify all information and consult a qualified financial advisor before making any investment decisions. Neither the author nor AR Preferred shall be held responsible for any loss or liability arising from the use of this information.