Investment Health Check

If you are living on earnings generated from investments it is always worthwhile from time to time to take stock of how your income is performing.  Years pass by so quickly and what was performing well in the past may not be generating at the same level now. 

True; investments should always be ‘viewed’ in the long term but they should also be ‘reviewed’ regularly to see if they are waning.  It is not only your money but also your income that is on the line. Think of it in the same way as a regular MOT.  You may not like it but it does warn you of any potential problems. 

If you are generating your income through a property rental your reappraisal is fairly straight forward.  Are you still generating a good return from your capital investment?  If, based on your initial capital investment you are achieving between 7% and 10% per annum then your money is working well for you.  Remember apart from the rental income you will also have the increase in capital value of the property, however small, to be added to your investment portfolio.

For investments in Unit Trusts and other share based products you should look at the previous couple of year’s performance and then compare with one or two similar investments.  Perhaps you have a managed fund that is quite narrow.  Talk to the fund manager and check what your options are and also what would be low, medium and high risk investments.

You should always make your fund manager or your financial advisor work for their commission or management fees.  You are after all paying them.  They may have put the time in to sign us but have now disappeared into infinity like a phantom. 

I do not want to be scathing as the majority of independent financial advisors and fund managers do their homework and have a wealth of knowledge at their fingertips.  However as with most walks of life – he who shouts loudest gets the job done.  So it is important to keep in touch with them then you will be at the top of the list when new products such as this year’s REIT’s have come on-line for the first time.

I have mentioned Real Estate Investment Trusts before.  It is a new UK government initiative to motivate people to save for the future.  As most of the UK population see bricks and mortar as a solid investment the introduction of REIT’s is a confirmation that property is a secure prospect and also one that will attract those who see other forms of investment as a waste of time.

Any investment portfolio should include a variety of saving and investment plans.  Whether you choose to keep your investments in the UK or start afresh in Spain with one of the Independent Financial Advisors based in based here, the complete package should spread both the risk and the type of product.  The old proverb “don’t put all your eggs in one basket” is very true. 

A good mix of assets could include pensions, cash, bonds, equities, property and a small mix of other types of investment.  If you are just relying on savings and a pension then you should aim to keep withdrawals from savings below 4% per annum (adjusted for inflation) just to stand a chance of keeping your savings into the future. The reality is that most people do not realise how quickly savings diminish even though you only ‘dip’ into them from time to time.

As with property an alternative classic investment that has had a special in the hearts of most of us is gold.  This wonderfully romantic commodity has had resurgence in recent years amongst fund managers.  They have finally realised that is a product for the long term and the last few years has shown that it has consistently beaten others in the sector.  If you had invested £1000 five years ago you would have seen it grow to £3000+.  

Of course alternatively you can just go out and buy a bar if you want to or better still buy a few coins.  Remember as coins are still legal tender in the UK they do not attract VAT.

 If you have any queries about this article or any Money Matters queries contact Ann on 661003324, email This email address is being protected from spambots. You need JavaScript enabled to view it..  If you have personal questions for Ann you may contact her via Big Attitude PR on 661757433, email This email address is being protected from spambots. You need JavaScript enabled to view it..


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