Yearend Financial Health Check

It?s been a year of low interest rates, solid global growth and good equity market returns. But regardless of whether your investments have paid off, now is a good time to check on the heath of your investments.

1.Evaluate your goals:
At this time last year, you may have set down some short-and longer health plans (e.g. lose weight, lower cholesterol levels). Similarly, for your investments, have you met your short and long-term financial objectives?

2.What is your diagnosis?:
Next, compare your investments against a benchmark (e.g. a person of a certain age will have a benchmark heart rate or blood pressure). This will ensure that your original expectations were not unrealistic.

3.Prevention is better than cure:
Even if you are happy with your portfolio performance this year, check if it?s adequately balanced going forward; does it have too much or too little risk? If you are less than satisfied, consider the reasons. Is this because of underperformance in specific investments? Did your portfolio grow overall? Don?t opt for a band-aid solution. Think what is necessary to achieve your long-term goals, and not just to boost your short-term returns.

4.Don?t get too emotional:
In investment, as in health, it appears that many unhealthy habits can be linked to emotional issues. Greed and throw you off balance. It can be tempting to jump into outperforming markets even if they are valued and don?t fit into your portfolio.

5.New year resolutions:
To stay healthy, you should aim to keep active and get enough rest. So too with your portfolio. Stay vigilant about new opportunities, but also avoid taking a trading approach for investment, which are meant for the long term.

6.Go to a specialist:
Apart from this periodic check up, it may become necessary to consult a specialist, especially if you have specific concerns. A specialist may be able to give you a more objective view of your investment needs and recommend a more disciplined regime. A specialist can also offer an insight into longer-term market trends and review your portfolio to see whether it is likely to achieve the returns you are targeting.

Take some time this yearend to have a look at your financial health. If you haven?t already done so, make it an integral part of your investment strategy going forward.

Source: Market outlook

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