Mind your money


Securities Industry Development Centre

WHAT would happen to an untended vegetable garden? You will surely see more brown weeds than green leaves and succulent fruits. The same thing applies to your investments. If left unmonitored, you may not see the desired result and returns.  

While it is important to do your homework before investing, maintaining the discipline to monitor your investments is equally important.  

Monitoring is a vital activity to ensure that your investments are performing according to your financial plans and expectations. By keeping an eye on your investments, you will be able to adjust your strategies to either enhance your returns or cut your losses.  

You must also monitor your investments in a correct manner to ensure efficiency. Here are a few simple 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 you perceive your financial plan to be, it will still be susceptible to changes.  

Changing laws and regulations, the turbulent nature of the domestic and world economic environments (for example, the 1997 Asian financial crisis), changes in the capital markets, and reversal of company fortunes can affect your investments. As a consequence, your investments may need to be restructured to suit your financial plan and goals better. As a wise investor, you need to be proactive to these changes. 

·Evaluate performance: You should continuously monitor and evaluate the performance of your investments to find out how they are doing. Regularly check how your shares, unit trust funds and other investments are performing against the projections made when you first established your investment goals. 

If your investments are doing well, you may want to pump in more money, or encash part of your profits and buy another investment product. If they are not performing as well as expected, you may decide to sell them. 

How often you should review your investments depends on the size and time frame of your investments, and whether you have chosen high-risk or low-risk assets.  

·Keep track of investment documents: The simplest way to monitor your investments is to review the documents and statements sent to you. Investment statements (for example, CDS account and trading account statements and contract notes) make your monitoring easier.  

A contract note, for example, is issued by your stockbroking company to confirm your 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 fees, cost of purchase and proceeds from the sale.  

If you do not receive the contract note, you must contact your remisier and insist that it be sent to you immediately.  

Upon receiving your investment documents, it is a good practice to read them and check their accuracy. If you think there is any inaccuracy, contact your investment professional immediately. You must also file your documents systematically for future reference. 

It is best to monitor your 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 your plans: You should review your portfolio of investments regularly. Your financial situation may change and therefore, you may need to review your financial plan and goals. For instance, should you receive a windfall, which increases your funds for investing; you may want to aim for bigger financial goals. 

On the other hand, you may actually have fewer funds for investing than you initially thought and may want to revamp your financial goals. 

When drawing up a financial plan with your investment professional, it is wise to have an exit plan. An exit plan stipulates what you need to do when your investments perform poorly or below your expectation. For instance, you could consider removing and replacing inferior investments. 

In conclusion, the day you start investing is not the day you stop referring to your investment plan or doing your homework.  

You will still need to read the newspapers and company annual reports regularly, follow the developments of your investments through television, radio and websites, or meet with your investment professional on a regular or need-be basis. 

The learning never stops. A wise investor will continuously equip himself with as much investment knowledge as possible to be on top of his/her investments.  

lThe Securities Industry Development Centre (SIDC), set up in July 1994, is the training and education arm of the Securities Commission (SC).   Its mission is to build human capital, guide investors in the capital market and develop investor education programmes to meet the objectives of the Malaysian Capital Market Masterplan and address national development needs.  

It is recognised as a premier training centre for capital market participants and regional regulators.  

Log on to SIDC-Malaysian Investor website (www.min.com.my) for information on how to be a wise investor. 

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