With the recent uncertainties in the commodities and share market here and overseas, have you been thinking more about your investments lately?
Investing is a great way to make your money work for you, however the journey to investment success–like all worthwhile pursuits–takes time, patience and skill.
Once you’ve worked out your needs and goals, it’s important to understand your own risk tolerance and investor style using AMP’s Investment style calculator before developing an investment plan.
Know what level of risk you are prepared to accept and the sort of investment style you prefer, such as conservative, aggressive or balanced, and be aware that retirement brings a unique set of investment risks. Some investments may be more suited to your investment style and risk tolerance.
But how can you tell if you’re considering an unsuitable investment? How can you be sure you’re making a good choice?
Sometimes an investment opportunity may already show signs that something is amiss. Like the old adage says, if an offer sounds too good to be true, it probably is. Make sure you understand the investment before you invest by learning about the product.
Moneysmart’s safety checks highlight some common traps of investing, such as investment seminars, sport betting systems and investment trading software. You can also get some pointers on how to spot an investment scam.
If you are using an investment manager, make sure they have an Australian Financial Services licence, meaning the licence holder agrees to be honest, efficient and fair1. If you’re not sure about their legitimacy, check with the industry regulator, the Australian Securities and Investment Commission (ASIC).
Managing your investments
By having a good overview of your investments, you will find it easier to identify how an investment is performing.
Use these 5 tips to keep on top of your investments:
- Monitor your investments regularly, rather than ‘set and forget’.
- Maintain good records and file your paperwork, such as transaction and performance statements. These will also come in handy at tax time and for accounting purposes.
- Research the market by keeping an eye on your investment portfolio. Do your own research online or in the newspapers.
- Goal alignment - Review your investments on a yearly basis to see if they still match your short and long term goals.
- Risk alignment - Remember that high performing investments, such as shares and property, can also mean higher volatility and higher risk of a loss. It’s important to keep a check on how much risk you are comfortable taking on, keeping in mind that your needs will change over time.
The value of financial advice
Consider the value a financial adviser can offer. A qualified financial adviser can help you make informed decisions about your investments based on your individual or changing needs, goals and financial situation. They will discuss any fees and payments with you upfront, so you can be sure you’ll know exactly where you stand before you start.
You can work towards your goals by learning more about investments, diversifying your investment portfolio to spread risks, conducting some checks and opting with a licensed financial adviser.
So, talk to your adviser, find an adviser or call us on 131 267. We’re here to help.
There’s more to family finances than just balancing the books.