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
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
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
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
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
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
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
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.
Review your plans
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.
Review your financial plan once a year and come up with new
strategies if your circumstances change.
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
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
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
Last updated: 29 Mar 2018