The wardrobe is a private space in your home, where you store all your personal items. It has different sections to keep things based on their utility and occasion. Clothes can be hung or folded. Separate sections for accessories, bags, etc. Items you need regularly are kept within reach; the ones you need occasionally are kept away.

Each one of us manage the wardrobe in our own style based on our interest and personality. Some people are messy and haphazard. Clothes and other stuff mindlessly shoved in the wardrobe to the point that it becomes difficult to even close the wardrobe door. And occasionally when the door is opened, the overflowing clothes tumble out. A messy wardrobe can stress you out, you end up wasting a lot of time rummaging through the clothes you want to wear. You hoard unnecessary stuff, it takes up a lot of space in the wardrobe. The clutter and the mountain of mess can give you panic.

On the other hand there are some who are so organised, like my very close friend. She is a wardrobe Ninja. Her wardrobe has sections for formals, in-formals, trousers and shirts (colour co-ordinated), a section for winter clothes, a section for travel clothes. Indian clothes are kept separately. Obviously, a separate section for occasional wear. All of them neatly stacked and labelled. Shoes neatly covered and packed in their original boxes. I suspect labelled too. Same goes with the bags as well. All neatly wrapped and packed. Once a year she goes through her wardrobe, reviews all her clothes, footwear, bags, etc. She purges what she doesn’t need and makes place for new stuff. Every time I go to her house, I tease her about it (obviously she gets irritated) and she recounts the benefits of an organised wardrobe. Easy visibility, access, saves time and stress free.  

I believe that your investment portfolio is like your wardrobe, it needs to be reviewed and reset once in a while. We all have a core portfolio and a satellite portfolio. The core portfolio, as the name suggests, is the core part of your investments. These are assets that will take care of your financial well-being for the next 5, 10, 20 years. The core portfolio is seldom churned. These are typically for long term wealth creation.  These need to be put in the back of the wardrobe, only to be removed to check if they are in order as far as performance is concerned. Just like you check your silks, woolens, heirlooms and jewellery. On the other hand, a satellite portfolio is where you can be a little tactical based on a view. Over a period of time, this portfolio gets filled up with a lot of stocks/funds, this needs to be reviewed, decluttered and organised from time to time. When you’re reviewing it, you will come across stocks/funds which could be similar industries, strategies, categories. If this is not reviewed regularly, the satellite portfolio could balloon disproportionately causing a skewed portfolio. So just like your wardrobe, reset your portfolio also once in a while, purge the stocks/funds you don’t need, review the ones you need and make place for new.