Questions for Personal Investing

In this article, we suggest 5 questions you may have which relate to your own investment portfolio. Everyone has a different set of circumstances, so we can’t cover everything here but it’s a good starting point to get your thinking on the right track.

Do you have your goals defined?

Each person has a different requirement from their investments which is dependent on their circumstances. Some want to let their investment mature so they can cash it in at a later date, some would rather earn dividends to be paid out now, and a lot of the time it’s a combination of both these factors. Often times you may be investing for something specific, such as your child’s college fund or for retirement. Either way, it helps considerably if you are conscious of your investment goals and your reason for investing. Essentially, having a plan makes it more likely that you’ll achieve what you set out to do.

Is your investment manager the correct one?

You’ll need to trust your investment manager’s investment approach, specifically if you put your money into unit trusts instead of shares. Their fees and experience will need to be taken into account as they will vary along with their understanding of the financial landscape. Having a similar investment outlook to your investment manager can put your mind at ease and bring positive results.

It’s important to trust your investment manager and this should be considered in the following ways:

  • The manager’s capability to deliver concrete returns
  • Their principles
  • The manager’s business competence — in other words, how long will they stay in business

Risk vs. reward: Does your investment have balance?

Safer investments are generally slower to grow and give smaller returns. Investments that give high returns in the short terms often have higher stakes and should be considered with caution. Here are some points to think about regarding higher risk options:

  • If your investment is not properly thought through, or if it is overpriced, you could lose your money for good.
  • If performance is unpredictable this may cause you to react in ways not best suited to your fund’s performance.
  • The high returns might not actually materialize.

Are you sabotaging your own success?

There are many studies which show that successful investor returns are on average less than that from the best performing unit trusts. This variation occurs when investment managers make poor choices when purchasing and selling, either reading the market poorly or acting on emotion over reason.

It is most often recommended that long term investment is a safer option as markets can be unpredictable in the short term. Leaving investments in place for longer periods can help to counter this and increase the likelihood of positive returns.

Which product is right for you?

When considering the products which best suit your investment needs, you’ll want to think about when you would want access to your return, what sort of tax implications you’re most comfortable with and how your investment is handled in the event of your death.

Different products fulfill different needs and it’s well worth talking to your financial advisor about which are best for you.

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