Investment Tracking: How To Monitor Your Portfolio and Stay On Top Of Your Investments

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Regular monitoring is an important part of the investment process. Reviewing your portfolio helps you see if your investments are bringing you closer to your financial goals. This also enables you to make timely adjustments to your portfolio when needed.

This article tells you more about the importance of monitoring investments regularly. It also suggests simple ways to stay on top of your investment portfolio.

  • Table of contents
  1. Why is investment tracking important?
  2. What to look for when reviewing investments
  3. Easy ways to monitor investments regularly

Why is investment tracking important?

Monitoring allows you to assess the performance of your investments and see if the fund's returns are in line with your expectations. Comparing your fund's returns to the scheme benchmark and other funds in the same category tells you how your investment is performing in comparison to the broader market.

If your scheme is consistently underperforming its benchmark as well as other funds in the same category, you may need to consider exiting the fund.

This process can also help you fine-tune your financial plans. If the scheme is performing in line with its benchmark and category peers but is falling short of your expectations, it could be because you had overestimated its return potential. This may prompt you to set a more realistic goal.

What to look for when reviewing investments

  • Performance: Compare the fund's performance against its benchmark index and category peers. Look at both short-term and long-term performance.
  • Asset allocation: Ensure the fund’s asset allocation matches your risk levels and goals. Check if the allocation has deviated significantly from the fund's stated strategy.
  • Risk metrics: Look at measurements such as Sharpe ratio and standard deviation to assess the fund’s volatility and risk-adjusted returns.
  • Standard deviation measures how much the portfolio’s return has strayed from its average return (based on the fund's historical performance). A larger deviation indicates higher volatility.
  • Sharpe ratio helps you understand the return of an investment compared to its risk. It calculates the excess return (return above a risk-free investment like a Treasury bill) per unit of volatility (standard deviation). A higher Sharpe ratio indicates better risk-adjusted performance.
  • Top holdings: Check the fund's top holdings to understand its diversification. Ensure it is not concentrated in a few stocks or sectors.
  • Manager changes: Keep an eye out for any changes in the fund manager or investment team, as this can impact the fund's strategy and performance.

Easy ways to monitor investments regularly

Here are some tips on how to track investments:

  1. Read monthly disclosures: Check your consolidated account statement regularly to monitor returns. Also read factsheets, portfolio disclosures, and other communication you receive from the mutual fund company.
  2. Use investment apps: Several apps and websites provide portfolio tracking and performance analysis services.
  3. Schedule reviews: Set aside a dedicated time, such as monthly or quarterly, to review your investment portfolio. Create reminders so that you don’t miss a review.
  4. Create a tracker: For even closer monitoring, you can maintain a document to track your investments, including purchase price, current value, and returns. Update it regularly and use it to compare the performance of different schemes, monitor trends and track progress.
  5. Stay informed: Keep a tab on economic indicators, market trends, and geopolitical events. These factors may impact your investments.
  6. Seek professional advice: If possible, consult a financial advisor for guidance on monitoring your investments. This is especially important if you’re considering any changes to your portfolio or investment strategy.

Conclusion
Investment tracking is essential for maintaining a healthy portfolio. By using easy monitoring methods, staying organised, and adjusting your investment strategy as needed, you can effectively manage your investments and work towards your financial goals.

FAQs:

How do I know if I need to rebalance my investment portfolio?
You may need to rebalance your investment portfolio if the asset allocation deviates significantly from your target allocation. Regular investment tracking and rebalancing can help if certain asset classes become over or underweighted due to market fluctuations. Rebalancing also maintains. desired risk levels and alignment with investment objectives.

What are some common mistakes to avoid when monitoring investments regularly?
When regularly doing investment tracking, it's important to avoid overreacting to short-term market fluctuations. Neglecting to review and adjust investment goals, failing to diversify adequately, ignoring fees and expenses, and being influenced by emotions rather than objective analysis are other common mistakes investors may make while reviewing their portfolio.

Is it possible to monitor my investments too frequently?
Yes, it is possible to monitor investments too frequently. Excessive monitoring can lead to unnecessary stress, impulsive decision-making, and increased transaction costs, potentially undermining long-term investment success.

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This document should not be treated as an endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purposes only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals, and horizon. This information is subject to change without any prior notice.