Whether you’re interested in investing in a company, or you’ve already invested in it, you should do some research. It will help you decide whether you should buy, keep, or jump ship.
Track the company’s:
- Profitability
- Earnings Growth
- Gearing / Debt
- Dividend Payouts
Keep up to date on:
- Announcements
- Shareholders’ Circulars
- Annual and Interim Reports
- Closing dates of right issues
- Warrant issues
- Takeovers offers
Pay attention to:
- Corporate Earnings
- Auditor’s Report
- Directors’ Interest
Make ourselves available to attend annual general meeting to find out how the company is managed and gauge its business prospects.
For collective investment schemes such as unit trust funds, monitor:
- Performance (relative to the objectives of the fund)
- Investment Strategy
- Reports
- Portfolio Allocation
You may ask your unit trust agent for more information, including:
- Performance of relevant investment markets
- Level of volatility associated with return
- Rate of inflation
- Performance of other similar unit trust funds
- Strategies employed in recent years
It is vital to monitor your investments, and to do so in the correct manner
What would happen to an untended vegetable garden? We will surely see more brown weeds than green leaves and succulent fruits. The same thing applies to our investments. If left unmonitored, we may not see the desired result and returns.
While it is important to do your homework before investing, maintaining the discipline to monitor our investment is equally important. Monitoring is a vital activity to ensure that our investments are performing according to our financial plans and expectations.
By keeping an eye on our investment, we will be able to adjust our strategies to either enhance our returns or cut our losses. We must also monitor our investments in a correct manner to ensure efficiency.
Here are 4 bonus tips to monitor your investments:
Pay attention to changes: we live in a dynamic world
Everything moves and changes at a fast pace, as such, no matter how foolproof and robust we perceive our financial plan to be, it will still be affected by changes.
Changing laws and regulations, the turbulent nature of the domestic and world economic environments, changes in the capital markets and reversal of company fortunes can affect our investment. As a consequence, our investments may need to be restructured to suit our financial plan and goals better. As a wise investor, we need to be proactive to these changes.
Evaluate performance
We should continuously monitor and evaluate the performance of our investments to find out how they are doing. Regularly check how our shares, unit trust funds and other investments are performing against the projections made when we first established our investment goals.
If our investments are doing well, we may want to pump in more money or cash out part of our profits and diversify it elsewhere. If they are not performing as well as expected, we may decide to sell them. How often we should review our investments depends on the size and time frame of our investments, and whether we have chosen high-risk or low-risk assets.
Keep track of investment documents
The simplest way to monitor our investments is to review the documents and statements sent to us. Investment statements make our monitoring easier.
A contract note, for example, is issued by a stockbroking company to confirm its stock market transactions. A contract note, which is a legally binding document, contains crucial details of your investment transactions, such as details of trade, brokerage, stamp duty, clearing feed, cost of purchase and proceeds from the sale. If we do not receive the contract note, we must contact our remisier and insist that it be sent to us immediately.
Upon receiving your investment documents, it is good practice to read them and check their accuracy. If anything seems amiss, contact your investment professional immediately. We must also file our documents systematically for future reference. It’s best to monitor our investments personally and not delegate the task to someone else. Monitoring should be done regularly and without fail as monitoring lapses may cost you dearly.
Modify our plans
We should review our investment portfolio regularly. Our financial situation may change and therefore we may need to review our financial plan and goals.
For instance, if we receive a windfall which increases our fund for investing; we may want to aim for bigger financial goals. On the other hand, we may actually have less capital for investing than we initially thought and may want to revise our financial goals.
When drawing up a financial plan without investment professionals, it’s wise to have an exit plan. An exit plan is what we need to do when our investments perform poorly or below our expectation. For instance, we could consider removing and replacing inferior investments.
In conclusion, the day we start investing is not the day we stop referring to our investment plan or doing our homework.
We still need to:
- Read the newspapers
- Read company annual reports regularly
- Follow the developments of our investment through television, radio and websites
- Meet with our investment professional on a regular basis
The learning never stops. A wise investor will continuously equip himself with as much investment knowledge as possible to be on top of the game.
