By Sumayya Davenhill
You have decided to invest and have mapped out your goals and developed an investment strategy to help realise them.
Putting your investment plan into motion can be exciting and you might find yourself eagerly, even impatiently, waiting to see it come to fruition. But as the old saying goes, “a watched pot never boils”.
Checking your investment performance too often can make it seem like time is moving too slowly because you’re focusing on it and waiting for something to occur.
While it’s easy to get instant updates on how your investments are performing through online platforms, ask yourself: How does this help you?
Keep in mind that markets are volatile, but it’s not your portfolio. You haven’t actually locked in any performance (gains or losses) until you sell your investment, but many novice investors react emotionally to bad news in the market.
If you have a well-considered financial plan and a diversified investment portfolio, you don’t have to check your investments every day. You’ll be working towards a long-term time horizon, where a single day’s dip in a 10-year journey is highly unlikely to make any difference at all.
So, if not daily, how often should you check your investments? This largely depends on your individual circumstances, but it’s likely your financial adviser will tell you to check in once a quarter.
Review your quarterly statements to see if there have been any significant moves in the market and look for opportunities – dips in performance often allow you to pick up quality investments relatively cheaply.
For most investors, their fund managers will identify those opportunities and switch into and out of different assets as market conditions change. So, an annual sit-down with your financial adviser should be just right.
But what if you don’t have a financial adviser? While we are big advocates of the benefits of sound, independent advice, we realise some investors prefer to navigate the investment landscape themselves. While this may seem a lonely road, fortunately it need not be.
Most investment managers have really useful websites packed with investment tools and insights, as well as industry professionals on hand to assist you with your unit trust-related questions. So, if you decide to go it alone, know that help (but not advice) is not far away.
When you decide to check your investments, be sure to know what you’re checking for. Sometimes, market movements can cause certain asset classes to grow faster than others, which means your asset allocation may need to be rebalanced to bring it back within its target range.
Another thing to look out for is whether you’re still on track to meet your long-term investment goals, especially if your goals change along the way. If the growth of your investment has not quite met your expectations, ask your financial adviser about the reasons behind that performance.
There’s usually a good explanation behind short-term underperformance; the trick is not to panic, and to remember that performance does not come in a straight line. When investing over the long term, ups and downs can (and should) be expected.
Sumayya Davenhill, head of Marketing, M&G Investments.
*The views expressed here are not necessarily those of IOL or of title sites.
IOL Business