How often should one review their investment strategy?

The recommendation to review an investment strategy regularly, at least once a year or during significant life changes, is based on the dynamic nature of both financial markets and personal circumstances. Investments can be affected by market trends, economic conditions, interest rates, and geopolitical events, all of which can change significantly over time. If investors do not review and potentially adjust their strategies accordingly, they risk falling behind or misaligning their portfolios with their goals.

Additionally, major life events such as marriage, the birth of a child, job changes, or nearing retirement can dramatically alter an individual's financial goals and risk tolerance. Regular reviews ensure that the investment strategy remains aligned with both current market conditions and the investor's evolving personal situation.

On the other hand, reviewing an investment strategy only once every five years or only when losses occur may lead to missed opportunities for growth or failure to mitigate risks before they manifest. Similarly, basing investment decisions solely on a friend's recommendation can be risky since it may not take into account one's individual circumstances and financial objectives. Regular reviews allow investors to stay proactive rather than reactive in their investment journey.