When was the last time you reviewed your investment portfolio? It’s a task that can seem daunting and a one that’s easily forgotten about as life gets in the way. But it’s an important step to take to ensure your investments are on track with your personal goals in mind.
If these seven signs are familiar to you, it may be time to arrange an investment review.
1. You can’t remember the last time you reviewed your investment portfolio
While you don’t want to be constantly monitoring your investments and worrying about temporary market fluctuations, your portfolio shouldn’t be something you never look at either. If you can’t remember the last time you reviewed your investments, it’s a sign that it’s probably been far too long.
It’s advisable to undertake an investment review on an annual basis at least, aligning with other financial planning steps that you take. A yearly timeframe gives you an opportunity to look at the long-term trajectory of your investments and still take action when necessary to minimise negative influences.
2. Your investment objectives aren’t clear
Your investments should reflect your wider goals in life. Do you want to grow a nest egg to retire comfortably in 20 years’ time? Or are you saving for your child’s education and need access to the money in just five years? Your objectives will have a big impact on how the money is invested and the level of risk you may be comfortable taking.
Reviewing your portfolio is the perfect time to think about what your objectives are and clearly define how your investments will support this.
3. Your financial situation has changed
Over the years your financial situation will undoubtedly change. Your investment strategy should too. Receiving an inheritance, for instance, may mean you can grow the overall size of your portfolio more quickly. While an increase in salary could mean you’re willing to take on more risk with a portion of your investments. Alternatively, having retired, you may start to withdraw some of your investment to use as income and reduce the level of risk you are subject to.
Your financial situation has a direct impact on how your investment portfolio should be structured.
4. You’ve experienced a big life event
Throughout life, events will have an impact on how you view finances and investments. If since your last portfolio review you’ve started a family, married, divorced, or retired, it’s time to look at how this may have changed the best approach for you.
Life events can influence our outlook on life and, therefore, money. It’s natural that this will affect your investment too. If your priorities have changed, it’s a good idea to see how your investment strategy continues to support them.
5. You have no idea how your investments have performed over the last year
It’s important not to get caught up in the short-term volatility that investment markets experience. It’s natural for the value of your investments to rise and fall over time. However, that being said, you should have a reasonable idea of how your investments have performed, allowing you to adjust where necessary.
Committing to regularly reviewing your investment portfolio means you’re aware of potential opportunities and risks you can take steps to avoid. It’s a process that can help maximise the value of your investments with your goals in mind.
6. You haven’t considered changes that are out of your control
While your personal circumstances and goals should be at the centre of your investment portfolio, wider changes also need to be considered. How economies perform will influence your investment value too, as well as other factors that are out of your control. While difficult, it’s important for them to be factored into your decisions.
A portfolio review gives you a chance to consider what key factors have changed in economies you’re invested in and how this may affect your portfolio’s value. Brexit is a current example of politics influencing investment portfolios, while environmental issues are increasingly affecting company values.
7. Your portfolio is losing value over the long term
Investments are highly likely to experience dips in value as markets fluctuate. But when you take a long-term view, beyond five years as a minimum, the value should be steadily increasing. If you look at your investment portfolio and see a sustained decrease in value it may be time to reassess your approach.
While you look at value, you should also consider the amount you’re paying in fees. These can quickly eat into your returns if the service you’re using isn’t delivering value for money.
If you’d like to understand how your investments are performing and whether steps could be taken to improve the results, we’re here to offer our support. Whether or not your circumstances have changed, we can help assess if your current investment strategy is suitable for your goals.
Please note: The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.