Chapter 13 – Monitoring Your Investments

Once you have constructed your portfolio you will need to monitor it to make sure it is performing as you had hoped and that you are on track to achieve your investment goals. A financial adviser will, or can, review your investments at your annual meeting. For those that have taken the self-managed route, these investors will have to review their portfolio’s performance themselves.


Many investors will have accumulated a collection of investment allocations over the years, and some might no longer match their current situation or investors may experience a change in their risk appetite. Having an incorrectly balanced portfolio could result unexpected losses in the case of market conditions adversely affecting your investments leading to overexposure or underexposure resulting from investors not restructuring their investment allocations which could lead to a loss of potential profits. Investment experts often recommend revisiting investment choices at least once a year. As and when your circumstances change, then conducting an extra review is always a good idea.


However, it is not just your circumstances as an investor that must be considered. Changes occur in the world of portfolio management too! Portfolio managers may move jobs for instance, and while a portfolio might be chosen because the manager has an excellent track record and a disciplined approach to investing, you may be advised to monitor your investments yourself if the person managing your money leaves the firm.


Portfolios and investment strategies that perform badly for a prolonged period, and which exhibit abnormal performance behavior might be worth reducing your exposure, or even making a full exit from the strategy. Many investors are guilty of allowing poorly performing strategies to continue. But sometimes bad performance happens so you shouldn’t be afraid of cutting your losses and exiting the strategy or program. The most important thing is to know that investment planning is not just a one-off exercise. It’s important to keep checking to see if your investments are still on the right track.