Lesson 11: Portfolio management and tracking

Over time, your circumstances will change which may mean your financial goals will change too.

Common life events that can trigger a change in focus may include:

• Career change, such as starting a new job with a different level of income, or starting a business
• Expenses change, such as buying or renovating a home or shifting from a double to single income household
• Family change, such as having children, or having children finish school
• Retirement, whether it’s planning ahead or entering retirement

Regardless of any major life events, it’s good practice to review your investment portfolio on at least an annual basis. This includes reviewing how you’re invested, what went well and what could have gone better in the past year, so you can determine what the best course of action is now.

We’ve covered a few crucial elements to consider when it comes to keeping track of your success and managing or reviewing your portfolio such as:

1. Have you checked your investment returns?
2. How is your diversification?
3. Are you keeping up-to-date with wider influences such as global news and the economy
4. Are you paying too much in fees?
5. Are you practising regular investing such as dollar cost averaging?
6. Are you participating in a Dividend/Distribution Reinvestment Plan (DRP)?

Let’s now look at portfolio rebalancing, and where to turn for help for your tax requirements.

After investing for a while, with some shares or asset classes performing better than others, you may find your asset allocation mix has diverged from your original plan, changing the risk profile of your portfolio in the process.

Rebalancing helps you return to the original asset allocation planned in your investment strategy so that you’re not more exposed to a particular company, industry or asset class than you want to be.

For some investors, contributing new money to a portfolio may be a better alternative than selling one asset and buying another to rebalance. But an investor later in life, who doesn’t plan on contributing new funds, may prefer to sell overweight assets to rebalance.

Rebalancing also gives you the opportunity to sell high and buy low, taking gains from high-performing investments and reinvesting them in areas that have not yet experienced such growth.