How to keep your investment portfolio performing
As time goes on and your investments start generating returns, it's important to keep asking the right questions about your portfolio. Here are some to run by yourself, or together with your financial adviser, to make sure that your portfolio stays at peak performance.
1. Do my investments still suit my timeline?
Time is the key to successful investing-the more you have of it, the better. It's important to remember that long-term goals won't be long-term forever. This will affect the way you invest. When you are 60 and nearing retirement, you may need something different from your investments than what you needed when you were 30 or 50.
2. Are my investment products still relevant to my needs?
Different investment products suit different life stages. If you're young, single and have few financial obligations, you should funnel as much of your discretionary money into investing as you can - and feel free to invest more aggressively. But if you have kids and a home loan, for example, you'll need to manage your investments more carefully, so you can safeguard funds for your children's education, as well as steadily pay off debt.
Every few years, check that the investment products you use - all of which have different costs, taxes, maturity dates and conditions - still align with your financial goals. And if you do want to change things up, remember that it will come at a cost, so do your research first.
3. Am I chasing past performance?
It's tempting to just invest in assets that have a good 'reputation' or record, but the truth is that past performance does not guarantee future results. While it isn't wise to make decisions that are rooted in the past, you can still use past trends and performance patterns to help you make decisions about how to alter your portfolio.
Consistent returns over time are certainly a good indicator - but not the only indicator! A financial adviser will be able to help you decide how to weigh these decisions.
4. Are my assets still well balanced?
Having a diversified portfolio is crucial to the success of your investments. Too much invested in any one asset increases your risk if something unexpected happens that devalues it - like a market crash due to a huge company filing for bankruptcy, or a global pandemic, or a natural disaster near property you've invested in.
Because the value of the asset classes you have invested can change over time, your portfolio should be reviewed and rebalanced regularly. This means, for example, that you may invest more heavily in some assets when you are younger, and in different ones when you are older, or wealthier. Rebalancing will help make sure your financial plan is still aligned with your goals for the future.
This document is meant only as information and should not be taken as financial advice. For tailored financial advice, please contact your financial adviser. Discovery Life Investment Services Pty (Ltd): Registration number 2007/005969/07, branded as Discovery Invest, is an authorised financial services provider. All life assurance products are underwritten by Discovery Life Ltd. Registration number: 1966/003901/06, a licensed life Insurer, an authorised financial service provider and registered credit provider, NCR registration number NCRCP3555. All boosts are offered through the insurer, Discovery Life Limited. The insurer reserves the right to review and change the qualifying requirements for boosts at any time. Product rules, terms and conditions apply.
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