It is commonly understood and accepted that investors should ensure their savings and investment portfolios are balanced, not simply in terms of the asset classes, markets, instruments and industries their investments are exposed to but also balanced in a time context, with Managed Funds typically seen as the investment of choice for the longer time horizon.
I agree with the above, but I’m also of the opinion Managed Funds are not simply a case of "set it and forget it". You would be remiss in simply choosing your preferred Managed Funds and then paying no further attention to them until you retire/need access to the monies. After all there is volatility in most things, and you need to actively monitor and review what’s happening so as to either make the most of an opportunity or minimize an exposure.
As a smart and savvy investor you owe it to yourself to make sure your hard earned cash is working as hard as it can be for you, and one of the best ways to achieve this is to monitor, review and adjust your investments. At the very least you should undertake an annual “warrant of fitness” for your portfolio.
Using hints, tips, commentaries and information in the media you need to keep yourself abreast of what’s going on and what may happen, and then decide how you want to best capitalise on this. Why not check our what the contestants in our Investor of the Challenge are investing in right now.
The internet is a wonderful thing, when it comes to accessing information, albeit the challenge sometimes is to filter through it and manage the time it can take up whilst you trawl around and read. One way is to tap into a few blogs and see what some people are saying, and not just the owner/author of the blog but also others who are reading and commentating on those blogs.
Some of the blogs I monitor are:
Use the vast and varied sources of information, along with that from financial advisors, to then conduct your warrant of fitness. See if the make up of your portfolio is going to take best advantage of what’s happening and expected to happen. Essentially develop a checklist and see how your portfolio scores against it – the warrant of fitness check.
As an example, let’s have a look at what’s been happening lately in the mortgage trust space.
What if you had some money tied up in these, but had also planned to liquidate these investments this year? Well, if you had money in those that have been suspended/closed/put on-hold then you would really struggle to get access to your monies when you need to. In most cases the recent decisions to suspend these funds has been very prudent and wise, and not a reflection of them being in trouble, however that doesn’t help if you need immediate access to your monies.
Whilst no one specifically came out in the past few months and explicitly stated that certain funds would be impacted, we have all heard that the property market has either ground to a halt or has gone backwards, and that investors have lost confidence … with the logical progression being potential impacts on many investments exposed to the property sector.
I’m not for one minute suggesting that the warrant of fitness approach will eliminate all risk or forewarn you of future problems, but at the very least you are proactively managing your investments. Taking the simple "set-it and forget-it" approach is somewhat negligent, and you owe yourself more than that.
I’d love to hear what you do to actively monitor your portfolio, what tips you may have for others and/or sources of information you rely upon.