The Big Secret to Learning How to Manage Your Investments

There was a time when the world of investments was relatively simple. For most people, it meant a home, a pension fund, a savings account and perhaps a few stocks and shares. All they had to do was sit back and watch them grow.

These days, it’s nowhere near as straightforward. Pension funds are in crisis, savings accounts offer negligible returns, and even the property market is no longer the surefire haven for your hard earned money that it once was. As for shares — the perilous state of the economy makes it easier than ever to get your fingers burnt.

Of course, there are also a growing number of alternative investments to consider. These include everything from fine wine and classic cars to gold and bitcoins.

Being proactive

One of the obvious consequences of the changes in the investment sphere is that sitting back and watching is no longer an option. To make your money work as hard as possible, it’s essential to become involved, and be proactive in managing your investment portfolio.

Which of the varying types of investments out there are right for you depend on both your personal circumstances and the market conditions. Each of these can change over time, which is why it is essential to know when to get in, and when to get out.

The dynamic nature of today’s investment sphere provides great opportunities for those who understand the markets, and there is a growing list of success stories surrounding angel investors who have made a successful career out of spotting the right opportunity at the right time.

Then again, if it were easy, everybody would be making great investments and driving Ferraris — we might all be familiar with the cautionary advice that the value of investments can go down as well as up, but the full implications of making a bad investment decision only come home to roost after the worst has happened.

Getting the best advice

For this reason, it makes sense to sit down with a financial adviser and go through your options. That involves far more than just looking at a list of possible investments and picking your favorite. A financial adviser will assess your overall financial position and help you prepare a set of forecasts. The idea is to draw up a coherent plan for the years to come, and the investments that will be most effective in getting you there.

Your plan will be unique to you and your circumstances. Your age, income, cash in the bank, family needs and aspirations will all be factors in making the right choice. For example, if you’re in your 30s, are looking for a long-term investment and do not mind tying your capital up, then property might be a perfect choice.

If you’re closer to retirement age and have money tied up in a poorly performing pension fund, then the advice might be quite different.

Keeping track

With the range of options available, it’s quite possible that you’ll end up with a broad investment portfolio, and keeping track of what you have and how it is performing can be as challenging as making the right choices in the first place.

Some choose to maintain a simple spreadsheet, using either Microsoft Excel or one of the many free alternatives that are growing increasingly popular. Spreadsheets can adequately track costs, tax liabilities, aggregate yields and, to a certain extent, trends.

But if you are serious about your investment activities, you should consider one of the online investment tracking solutions that have become available over recent years.

If you work alongside a financial adviser, you might find that they offer a client portal; these are handy mechanisms by which to keep track, using the same tools that the professionals use.

Making your money work harder

The media is full of disturbing stories about the difficult economic times in which we live, with debt rising to record levels and seniors working later into life due to poorly performing pension funds. But it’s not all bad news. Today’s investors have more choice and flexibility than ever before, and by combining a proactive approach with the right tools, there are great yields to be realized.

It has never been more important to constantly keep on top of your investments to make your money work as hard as possible for a prosperous future.

Photo Credit: Dazzy D