Keep track of your investments

Eyes wide open

Tempted to just invest and forget? You'll feel much more informed and confident if you look at your investments every so often.

Keep your eyes open and be prepared to ask questions of your adviser or the product issuer. Watch out for warning signs that tell you something may be going wrong. Things change, so review your plans regularly. 

Keep track of each investment

For each investment you have, you'll receive periodic transaction statements showing the value of your investments and the fees and taxes paid. Store these records in a safe place, so that you can easily lay your hands on them for accounting and tax purposes.

Good record keeping is an essential part of investing. Treat your paperwork like your best friend-it will save you from stress in the future.

You may also wish to watch your portfolio by periodically looking at websites or newspapers. It's easy to check the price of shares and units in managed funds and super funds.

If you have invested for the long term, don't be spooked by short-term ups and downs.

Look out for warning signs

There's no guaranteed way to spot losses in advance but sometimes there are warning signs that an investment may be heading downhill. Here are some typical warning signs to look out for.

Accounting problems

Mistakes, delays, audit qualifications and controversy over accounts could be warning signs. Accounting rules can be complex and genuine errors or differences of view do occur, but repeated issues may indicate deep-seated problems. Significant unexplained expenses or large consulting fees to related parties could indicate company director fraud.

Published statements

Sometimes the Australian Securities and Investments Commission (ASIC) or the Australian Securities Exchange (ASX) requires issuers of investment products to publish statements clarifying or correcting information given to investors. The investment may still be suitable, but these public statements may signal that the investment involves more risk than you are willing to take. The problem may have been a genuine oversight but you need to be sure.

Management problems

Director and senior management in-fighting, resignations, breaches of the law or unethical conduct can be warning signs. Changes in management may be necessary, but it could distract the management's attention from running the business.

Over-promising and under-delivering

While even the best managers can make mistakes, ongoing disappointing results, lack of communication and falling service standards may point to something being seriously wrong.

Video: How to keep track of your investments

Video about how to keep track of your investments with Nicole Pedersen-McKinnon.

Nicole Pedersen-McKinnon explains how to track investments and how often you should review your portfolio.

Transcript: How to keep track of your investments

Review your plans

Smart tip

Review your financial plan once a year and come up with new strategies if your circumstances change. 

The world changes and so do you. That's why successful investors review their plans regularly. The rule of thumb is to revisit your investment plan at least once a year. 

Start with a review of your financial situation and goals. Perhaps your circumstances have changed. Have there been any births, deaths, marriages, sickness or career changes in your life? Life events may mean some goals are no longer relevant. You may have to come up with some new ones.

If your goals change, you may have to re-jig your strategies too. A change in your employment status or health may alter the risks you are prepared to take when investing.

Finally, consider whether the value of the individual investments in your portfolio has changed. If you are making your own buy and sell decisions, you may need to review and rebalance the investment mix to make sure it still matches your strategy and attitude to risk. If you are using a fund manager they will generally make rebalancing decisions for you.

Coping with sudden changes

Market and economic conditions can change rapidly, but a knee-jerk reaction can often make things worse.

Make a decision based on your long-term investment goals and what you think will happen in the future. Do not make a decision based on what has happened in the past (eg. my investment has gone down 20%).

Review your goals and risk tolerance. If your investments still fit your goals and risk tolerance, then you would need a good reason to change.

If your investments do not fit your goals and risk tolerance, you have a tough decision. Should you change investments (and sell when prices are low) or hope that your investments will go up in value? You may want an adviser to assist you with this decision (see financial advice).

If you have an adviser, talk to them. See working with an adviser.

If you need to meet a margin call, see margin loans.

Congratulations on making your way through the steps to becoming a smarter investor. As you continue with your investment planning and decision-making, trust your common sense. Remember the golden rule - if it sounds too good to be true, it probably is.


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Last updated: 04 Nov 2016