Where People Invest: Tracking Trends

Tracking where people invest can be challenging, especially if you have multiple assets and accounts. However, it is essential to know what's going on in your portfolio to ensure you are on track to reach your financial goals. Fortunately, there are many portfolio trackers available to help you monitor your investments. These include mobile apps, software, and online tools that can provide real-time information and insights on your investments, helping you make informed decisions. By using these tools, you can easily access data on your stocks, bonds, mutual funds, exchange-traded funds (ETFs), retirement accounts, and more, all in one place.

Monitor your investments regularly

Monitoring your investments regularly is crucial to ensure your financial goals are on track and that you're comfortable with the investment risks you're taking. Here are some detailed tips to help you monitor your investments effectively:

Determine the Frequency of Reviews: The frequency with which you review your investments depends on your financial goals, investment timeline, and the types of assets you hold. For example, defensive assets like savings accounts and fixed-interest investments can be checked more frequently when you receive statements, while growth assets like property, shares, and managed funds are more volatile and are typically reviewed once or twice a year.

Diversify Your Investments: Ensure your investments are diversified across different asset classes and sectors. This helps protect your portfolio from being overly exposed to the risks associated with any single investment or sector. Diversification can be achieved by investing in a variety of asset classes, such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), and property.

Set Up a 'Watch List': Create a watch list for the shares you own through platforms like the Australian Securities Exchange (ASX) or your online broker platform. This enables you to easily track share prices, dividends, and price-sensitive announcements that can impact your investments.

Review Reports and Statements: Stay updated with semi-annual and annual reports from companies you've invested in. These reports provide valuable insights into the company's performance, important changes, and expectations for the coming year. Additionally, review the annual statements from your investment funds, which detail fund performance, fees, and distributions.

Utilize Tracking Tools and Apps: Take advantage of the many portfolio management apps available, such as Empower, SigFig Wealth Management, Sharesight, and Yahoo Finance. These apps can sync with your existing accounts and provide real-time information on your investments, including performance tracking, asset allocation, and retirement planning.

Monitor Managed Funds: To monitor the performance of your managed funds, check their websites for unit prices, online fund updates, and financial statements. You can also use websites like Morningstar and InvestSmart to track the fund's returns and compare its performance against benchmarks and similar managed funds.

Keep an Eye on Investment Properties: If you invest in real estate, use real estate websites and platforms like CoreLogic and the Australian Bureau of Statistics to monitor property prices and monthly housing price updates. Additionally, keep an eye on auction clearance rates, which indicate the strength of the property market.

Be Aware of Warning Signs: Stay vigilant for warning signs that may indicate potential issues with your investments. These include financial and accounting problems, frequent changes in the company's board and management, and directors or managers selling their shares in the company.

Review Your Investing Plan: It's important to review your investment plan at least once a year to ensure your investments are still aligned with your financial goals, risk tolerance, and investing timeline. This review process helps you make any necessary adjustments to stay on course.

Review your investment plan annually

Reviewing your investment plan annually is an important step in maintaining peace of mind about your finances today and in the future. It allows you to assess your financial situation, ensure your investments are on track, and make any necessary adjustments to stay aligned with your goals. Here are some key considerations for your annual investment plan review:

Assess Your Financial Situation

Start by taking a snapshot of your current financial state. This includes examining your assets, such as emergency funds, retirement accounts, investments, real estate, and valuables, as well as your liabilities, such as loans, credit card debt, mortgage, and monthly expenses. This comprehensive view of your finances will provide a clear picture of your financial health and help you identify areas that need attention.

Evaluate Your Investment Strategy

Review your investment strategy to ensure it aligns with your goals and risk tolerance. Ask yourself if your investments are performing as expected and if they still fit your investment profile. Consider the level of diversification in your portfolio and whether you need to make adjustments to maintain your desired asset allocation. Diversification can help improve returns and manage risk, so periodically rebalancing your portfolio is essential.

Prioritize Your Goals

Use your annual review to prioritize your financial goals. This may include saving for retirement, planning for a child's education, or investing in real estate. By estimating the cost of these goals and evaluating your progress, you can determine if you're on track or need to make adjustments. This is also an opportunity to assess your risk tolerance and ensure your investment strategy aligns with your comfort level.

Be Proactive and Adapt to Changes

Annual reviews allow you to be proactive and intentional about your financial future. Reflect on any changes in your life, shifts in priorities, or evolving family dynamics. Making minor adjustments to your financial plan as needed is easier than implementing significant changes later on. It's important to approach your investments with a long-term view and avoid making impulsive decisions based on short-term market fluctuations.

Seek Professional Guidance

Consider working with a financial advisor or planner who can provide customized guidance and help you navigate the complexities of investing. They can assist you in understanding your asset allocation, risk management, and tax implications. Additionally, regular reviews with a financial professional can strengthen your relationship and ensure they have a deep understanding of your personal situation and goals.

Remember, your annual investment plan review is a valuable opportunity to stay on top of your finances and make informed decisions to achieve your short-term and long-term goals. By being proactive and comprehensive in your review, you can increase your financial well-being and confidence in your investment decisions.

Use portfolio trackers

Portfolio trackers are a great way to monitor your investments and keep an eye on all your holdings in one place. This is especially useful if you have multiple investment accounts and want to see the big picture of all your investments combined.

Portfolio trackers can be software or apps that allow you to monitor stocks, bonds, options, currencies, futures, and other assets in your investment portfolio. They can either automatically import your investment transactions or require you to manually input them. Most portfolio trackers also automatically update the value of your investments based on current prices and the number of shares you own.

Empower (Formerly Personal Capital)

Empower is a free hybrid digital wealth management company and finance app that offers a range of free tools and calculators to help with everything from net worth tracking to retirement planning. It provides a financial dashboard where you can add your credit cards, savings, checking account, loans, investments, and more to track your net worth, spending patterns, and investment performance. Empower also offers an Investment Checkup tool that assesses your total portfolio's risk and allows you to model individualized asset allocations. Additionally, it has a Retirement Planner function to help you determine if you're meeting your savings and retirement goals.

SigFig Wealth Management

SigFig is a portfolio tracker app that offers a free version and a fee-based version. The free version automatically syncs your investment accounts and provides a real-time view of your stocks, mutual funds, and exchange-traded funds (ETFs). It can connect with over 50 brokerages, including Schwab and Fidelity. The fee-based version allows investors to create a personalized plan that incorporates risk tolerance and time horizon for a fee of 0.25% per year.

Sharesight

Sharesight is a portfolio tracker and tax-reporting product that tracks your investments, dividends, and diversification across 50 international exchanges. It covers more than 250,000 stocks, ETFs, and funds from global markets and over 100 global currencies. Sharesight provides in-depth reporting, charts, and live price updates to help you compare your results across brokers and assets. It also automatically updates corporate actions, dividend updates, DRPs, and share splits in your portfolio. Additionally, Sharesight offers tax reporting features to simplify the process during tax season.

Kubera

Kubera is a modern portfolio tracker that allows you to track all your assets, including traditional investments and cryptocurrencies, in a single place. It connects to over 20,000 banks worldwide and also enables you to add the value of your home, vehicles, or web domains. Kubera provides a snapshot of your net worth and tracks the performance of your investments in real-time. It is well-suited for investors interested in tracking crypto, NFTs, and DeFi.

Morningstar

Morningstar is a well-known source for independent analysis and ratings of mutual funds. It offers both free and paid options for portfolio tracking. The free version allows you to track your investments by inputting the ticker symbol, number of shares, date purchased, purchase price, and commission paid. The paid version, Morningstar Investor, provides additional features such as analyst reports, top investment picks, and advanced screener options.

These are just a few examples of the many portfolio trackers available. Each tracker has its own unique features and pricing plans, so it's important to consider your specific needs and preferences when choosing the right one for you.

Monitor different investments differently

Monitoring your investments is crucial to staying on top of your financial goals and ensuring you are comfortable with the level of risk you are taking. Different types of investments require different monitoring approaches, and the frequency of monitoring depends on factors such as your financial goals and investment time horizon. Here are some ways to monitor different investments:

Defensive Assets:

Defensive assets include savings accounts, term deposits, and fixed-interest investments like bonds. These are generally less volatile and may not require constant monitoring. When you receive a statement, check that the income, such as interest, is being paid, and ensure that the value of your capital hasn't changed significantly.

Growth Assets:

Growth assets, such as property, shares, and managed funds, tend to be more volatile. It is recommended to review these investments once or twice a year. For shares, monitor them around the time semi-annual and annual reports are released. Over-tracking growth assets may lead to over-trading, resulting in selling when markets dip and deviating from your long-term investment plan.

Shares:

To monitor shares effectively, set up a 'watch list' through a platform like the Australian Securities Exchange (ASX) or your online broker platform. This will help you track share prices, dividends, and price-sensitive announcements. Review the semi-annual and annual reports to understand the company's performance, important changes, and expectations for the coming year.

Managed Funds:

To monitor your investments in managed funds, read the fund's annual statement, which outlines its performance, fees, and distributions. Additionally, check the fund's website for unit prices, online updates, and financial statements. You can also track the fund's returns through websites like Morningstar and InvestSmart and compare its performance against similar managed funds and benchmarks.

Investment Property:

To monitor the performance of an investment property, use real estate websites to review the prices of comparable properties that have been sold recently. Keep an eye on monthly housing price updates published by entities like CoreLogic and the Australian Bureau of Statistics. Monitoring auction clearance rates, either online or in newspapers, will also give you insights into the strength of the property market.

Retirement Accounts:

Retirement accounts like 401(k)s and Individual Retirement Accounts (IRAs) can be monitored using portfolio management apps. These apps allow you to sync your retirement accounts and provide valuable insights into your asset allocation, fees, and performance. Some apps even offer retirement planning tools to help you stay on track with your savings goals.

Know the warning signs of poor investment performance

Knowing the warning signs of poor investment performance can help you avoid making bad investments and protect your financial interests. Here are some key red flags to watch out for:

Urgency to Buy: Be cautious if you feel pressured to invest immediately due to a sense of urgency or fear of missing out. Good investments are usually sound over the long term and don't require rushed decisions. Take the time to understand the investment and ensure it aligns with your goals and risk tolerance.

Pushy Investment Advisors: Be wary of investment advisors who aggressively push certain investments or use high-pressure sales tactics. Some advisors work on commission and may be incentivized to recommend investments that earn them higher compensation rather than those that are in your best interests. Consider working with a fee-only financial advisor who has a fiduciary duty to act in your best interests.

"The Next Big Thing": Be sceptical of investments touted as the "next big thing" or compared to extremely successful companies. These claims are often exaggerated to lure investors, and it's challenging to predict the next industry leader accurately. Rely on your research and the advice of trusted advisors instead of sensational claims.

Lack of Understanding: Avoid investing in something you don't fully understand. Complex or opaque investments can be risky, especially if you can't explain them simply. Ensure you have a clear grasp of the investment strategy and potential risks before committing your money.

Risk-Free Claims: All investments carry some level of risk, so be cautious if someone guarantees an investment is risk-free or promises high returns with no possibility of loss. Such claims are often indicators of investment scams or dishonest brokers. Remember that higher returns typically come with higher risks.

Misalignment with Goals: Ensure that any investment aligns with your financial goals and risk tolerance. Even if an investment is legitimate, it may not be suitable for your specific circumstances. Assess your investment objectives, time horizon, and risk appetite before committing.

Too Good to Be True: If an investment opportunity seems too good to be true, it probably is. Be wary of exaggerated claims, hyperbole, or promises of incredible gains with no risk. Trust your instincts and do your due diligence to avoid falling prey to scams or misleading promotions.

By being vigilant and informed, you can avoid many of the pitfalls associated with poor investment performance. Always conduct thorough research, seek advice from trusted sources, and make investment decisions that align with your financial goals and risk tolerance.

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