Wealth managers refer to dead investments as assets that continue to occupy space in a portfolio despite offering little value. According to Vijay Kuppa, CEO of InCred Money, a dead investment is an asset that has not been able to generate growth or returns over a long period or one that no longer serves its purpose in a portfolio. Gibin John, Senior Investment Strategist at Geojit Investments Limited, defines these investments as ones that consistently deliver returns below the risk-free rate or post prolonged negative growth while offering little liquidity and limited prospects for future value creation. As reported by Mint, the problem often goes unnoticed because investors rarely revisit the reasons behind their investment decisions.
Experts recommend investors avoid judging investments solely on short-term performance and instead focus on extended periods of underperformance. According to John, investors should review an investment if it has failed to generate meaningful returns over an extended period while comparable investments in the same asset class have continued to perform. Kuppa recommends long-term investors review their portfolios every six months or at least once a year, with reviews also warranted after significant life events such as changes in financial goals, new jobs, or retirement approaching. Beyond returns, investors should assess material changes in company management, business fundamentals, corporate governance standards, or regulatory environment that can alter the original investment thesis.
The definition of dead investments doesn't change, but investor circumstances do, as noted by John. While younger investors generally have more time to wait for recoveries, those nearing retirement or approaching important financial goals may no longer have the same flexibility. Kuppa emphasizes that investors in their 20s can afford to remain invested through market cycles if underlying fundamentals remain intact, but those nearing retirement need to be more selective because preserving capital and meeting near-term financial goals become increasingly important. According to Garg, investors should ask themselves whether they would buy the investment again today, if the original reason for investing has changed, and if it still fits their financial goals, investment horizon, and risk appetite.
Financial planners emphasize that portfolio review is not about chasing returns but ensuring every investment continues to justify its place. As reported by Mint, removing investments that no longer serve a purpose can help investors deploy capital more efficiently and keep portfolios aligned with long-term financial objectives. Garg warns that checking portfolios too frequently often leads to emotional decisions, stating that a bad quarter does not make an investment dead. He suggests that the answer to key questions should trigger a review, not necessarily an immediate sale, helping investors maintain discipline in their investment approach.
