For each investment you have, you'll receive periodic transaction statements showing the value of your investments and the fees and taxes paid. Store these records in a safe place so that you can easily lay your hands on them for accounting and tax purposes.
Good record keeping is an essential part of investing. Treat your paperwork like your best friend and it will save you from stress in the future.
You may also wish to monitor your portfolio by looking at websites or newspapers. You don't have to check every day, but it's easy to check the price of shares and units in investments such as managed funds and KiwiSaver funds.
If you have invested for the long term, don't be too concerned by short-term ups and downs.
Review your plans
The world changes and so do you. That's why successful investors review their plans regularly. The rule of thumb is to revisit your investment plan at least once a year.
Start with a review of your financial situation and goals. Perhaps your circumstances have changed. Life events may mean some goals are no longer relevant and you may need to revise or set some new investment goals.
Finally, consider whether the value of the individual investments in your portfolio has changed. If you are making your own buy and sell decisions, you may need to review and rebalance the investment mix to make sure it still matches your strategy and attitude to risk. If you are using a fund manager they will generally make rebalancing decisions for you.
Look out for warning signs
There's no guaranteed way to spot losses in advance but sometimes there are warning signs that an investment may be heading downhill. Here are some typical warning signs to look out for.
Mistakes, delays, audit qualifications and controversy over accounts can be warning signs. Accounting rules can be complex and genuine errors or differences in views do occur, but repeated issues may indicate deep-seated problems.
A key on-going requirement for listed companies is to disclose certain information to the market in a timely manner through an information service - usually via a stock exchange. It is a good idea to keep an eye out for such announcements as it will help keep you informed as to what is happening within the company. If you belong to KiwiSaver a good place to look for information is in the annual statements and reports.
Director and senior management in-fighting, resignations, breaches of the law or unethical conduct can be warning signs. Changes in management may be necessary, but it could distract the management's attention from running the business.
Over-promising and under-delivering
While even the best managers can make mistakes, on-going disappointing results, lack of communication and falling service standards may point to something being seriously wrong.
Deal with investment challenges
Market and economic conditions can change rapidly, but a knee-jerk reaction can make things worse. The key is to keep your end goal in mind. The investment loss may be due to various factors, for example; a fall in the overall market, problems with one investment in your portfolio, poor advice or breaches of the law. Here we discuss what to do if:
Your investment company gets into financial trouble
Sometimes companies fail for different reasons. You should contact them immediately if:
They stop paying your interest payment
They stop paying the distribution you expect to receive
You see something in the media about your investment company going into administration, liquidation or receivership.
The most recent prospectus or the investment statement will have your investment company's contact details. Alternatively, if you know who the receiver is, you can contact them directly.
Whether you will get any money back will depend on what type of investment you have and the financial status of the company. For example, if you own shares in the company, any money that is recoverable will first go to the company's creditors and then to shareholders.
It's also a good idea to get legal advice about your rights and whether you are entitled to any compensation early on. The reasons for the company defaulting may include misconduct or a breach of the law, and you might be able to be compensated. For more information see our information on how to get your money back.