New research shows that more than 50 per cent of Australians are financially stressed—that’s more than one in two people. This type of stress has negative consequences on the well-being of people in different degrees. More women have been found to feel its impact (90 per cent) compared to men (77 per cent). These can be attributed to several factors: shame that comes with debt, poor financial planning, and an overall lack of understanding of one’s financial situation.
Stressing out about one’s investments can also be a factor since investors are likely to worry about their portfolio.
In many instances, though, the problem doesn’t lie in the actual investments; it’s in the investor.
An individual’s behaviour can sabotage portfolio by committing investing mistakes.
Making mistakes is normal. They can happen to experienced investors. The great thing about it is mistakes can be a breeding ground for learning. But while mistakes are impossible to avoid, one can minimise errors by performing due diligence—conducting research or—getting professional investment advice.
Each investor must have a strategy that matches both their wealth building goals AND their tolerance for risk. An investor with a high-risk profile could be a disaster waiting to happen.
You can avoid this by consulting with a professional when developing a sound strategy that reflects your needs and circumstances.
It’s vital to review asset allocation at least annually. Performing regular reviews of the portfolio balance will ensure it meets goals.
There must be a balance across asset classes. Take profits on investments that perform well and cut your losses. Make sure that you also include this as part of your tax strategy to manage potential capital gains and losses.
Investors without the expertise and knowledge of a professional can run the risk of trading excessively as a result of the enormous data available. This can be problematic if not done with caution because it can result to tax consequences.
This can result to unwanted fees and penalties from miscalculations and late lodgement of notices, not to mention the legal consequences.
There are tons of portfolio management software available that will help you be on top of record keeping so take advantage of those.
Remember that at the end of the day, it is still your money. It’s your responsibility to make investment decisions. Of course, you should factor in the smart advice of your adviser, but it’s still going to be your call.
Giving up full control to your adviser and not having any idea about what’s going on can be a recipe for disaster, especially if you end up with one who’s not right for you.
Investors are bound to worry. At some point, they will become anxious about their portfolio—what’s performing, what’s not, are there any changes need or is there even a need to change anything at all, etc.
This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individual’s personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.