This one investment in your portfolio could be quietly hurting your wealth, here’s how to find it

Not every investment that has delivered poor returns deserves to be sold. But some investments quietly stop serving the purpose they were bought for, tying up capital that could potentially earn better returns elsewhere. Wealth managers refer to these as “dead investments” or “dead money”—assets that continue to occupy space in a portfolio despite offering little value.

Experts say investors should periodically review their portfolios to identify such investments instead of holding them indefinitely out of hope.

Dead investments are more than just poor performers

A dead investment isn’t simply one that has fallen in value. Rather, it is an investment that no longer helps an investor achieve their financial goals.

“A dead investment could mean an asset that has not been able to generate growth or returns over a long period. It could also be an investment that no longer serves its purpose in a portfolio,” said Vijay Kuppa, CEO of InCred Money.

Gibin John, Senior Investment Strategist at Geojit Investments Limited, defines a dead investment as one that consistently delivers returns below the risk-free rate or posts prolonged negative growth while offering little liquidity and limited prospects for future value creation.

“In such cases, an investor’s capital remains locked in an asset with poor expected returns and high opportunity cost,” he said.

According to Rhishabh Garg, CEO of FundsIndia.com, the problem often goes unnoticed because investors rarely revisit the reasons behind their investment decisions.

“It could be a mutual fund that has underperformed peers for years, a stock that has stopped creating value or even an insurance-cum-investment product that is neither building wealth nor providing adequate protection. Investors should ask themselves one simple question: ‘Can I still explain why I own this investment?’ If the answer is no, it may already have become a dead investment,” Garg said.

What should investors look for?

Experts agree that investors should avoid judging investments solely on short-term performance. Temporary underperformance during market cycles is common, particularly in equities.

Instead, John says 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. A lack of any credible reason for the prolonged underperformance, especially when better alternatives exist, is another signal that the investment deserves closer scrutiny.

Kuppa recommends that long-term investors review their portfolios every six months or at least once a year. A review is also warranted after significant life events, such as a change in financial goals, a new job or retirement approaching.

Beyond returns, investors should assess whether there have been material changes in a company’s management, business fundamentals, corporate governance standards or regulatory environment, as these factors can materially alter the original investment thesis, he said.

Garg believes annual portfolio reviews are sufficient for most investors, warning that checking portfolios too frequently often leads to emotional decisions.

“A bad quarter does not make an investment dead,” he said. “Investors who review portfolios too often tend to exit good investments prematurely while continuing to hold weak ones without reassessing the original investment rationale.”

Don’t ignore changing financial goals

Experts caution that an investment can become unsuitable even if it has not performed poorly.

“The definition of a dead investment does not change, but the investor’s circumstances do,” John said. While younger investors generally have more time to wait for recoveries, someone nearing retirement, or approaching an important financial goal, may no longer have the same flexibility. In such cases, an investment that once suited the portfolio may no longer be appropriate.

Kuppa echoed a similar view, saying investors in their 20s can afford to remain invested through market cycles if the underlying fundamentals remain intact. Those nearing retirement, however, need to be far more selective because preserving capital and meeting near-term financial goals become increasingly important.

Before deciding whether to continue holding an investment, Garg suggests investors ask themselves a few questions: Would I buy this investment again today? Has the original reason for investing changed? Does it still fit my financial goals, investment horizon and risk appetite? Or am I simply holding on because I do not want to book a loss?

“The answer to these questions should trigger a review, not necessarily an immediate sale,” he said.

Financial planners say that reviewing a portfolio periodically is not about chasing returns but ensuring that every investment continues to justify its place. Removing investments that no longer serve a purpose can help investors deploy capital more efficiently and keep their portfolios aligned with their long-term financial objectives.