Invest for life: setting your schedule

The value of your investments and the income you receive from them can go up and down, and you may get back less than you invest. Any examples are for illustration purposes only.

Investing is a great way to take control of building your own wealth over time. Creating habits at the outset puts the whole process in motion.

If that’s already conjuring up images of diet plans, workout diaries and gratitude journals, you’re in luck - it doesn’t have to feel that arduous. In fact, a bit of planning when you’re starting out makes the choices that bit easier for the rest of the journey, as you’ve already filled in the ‘why’ element of it all, which everything else flows from.

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When it comes to the actual investing routine you get into, having a set of personal pointers can help you stick to the plan and avoid the temptation to veer off into unsuitable assets, take risks outside of your tolerance, act rashly, or neglect your portfolio for extended periods.

Here are five tips to help keep you on the investment path you’ve set for yourself:

Picture your investment journey like a view of the Earth from space (stay with me here). The further into the galaxy you travel, the smoother the surface of the big blue planet looks. Head back home and that outline starts to look a lot more uneven, rough and jagged.

If you only focused on the up-close perspective, you’d likely never even realise the more consistent scene that comes with scale. It’s the same story with your investments. Stay glued to the intra-day changes and it will look frantic. Zoom out over years and history shows us the glory of compound interest should give a clearer picture of growth over time.

Tenuous analogy aside, the point here is there is nothing inherently wrong with checking on your portfolio regularly but it could start to alter how you think about your investments. Volatility will crop up and if you are primed to react to day-to-day movements, market swings could make you act out of emotion rather than long-term logic.

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There’s no law against daily check-ins but, first, ask why you’re looking. If it’s curiosity or a way to understand how the world is affecting markets it’s not a bad thing to check in when you like. If you’re logging in constantly and getting nervous as a result, or if you’re prone to trading impulsively and regretting it later, those incessant check-ins could do damage. The wider guidance about not checking daily is designed to capture those in the latter camp - the ones likely to look at the Earth through a microscope instead of from the Moon.

It’s important to set your portfolio up with a mix of assets that suits your investment goals. Shares, bonds, cash and co. - they all play a part in helping form a risk profile that fits your journey. The market has a knack of playing around with that finely tuned blend though. Natural market movements will mean the scales will constantly shift so it can make sense to pop in and bring it all back in line from time to time.

The problem comes when you start to do it too often and end up scuppering the performance of assets doing well, only to support other laggards. To paraphrase investing legend Peter Lynch, “Don’t pull up the flowers and keep watering the weeds”.

One way to take the thinking out of it is to schedule in a rebalancing sesh once or twice a year. It keeps the process regular and helps restore your portfolio’s balance while still leaving time for well-performing assets to deliver returns rather than constantly having the rug pulled out from underneath them.

One of the risks of checking in on your account too often is that you naturally heighten the chance of making a trade just because you’re there. We tend to think more button pressing leads to better results but, because good long-term investing relies on compound interest (which works better the longer you leave it), often the opposite is true. The hare might want to snipe at profits and jump in and out of the market but the tortoise can end up having a more fruitful journey just by letting time do the work.

If you are placing a trade, for your own benefit make sure there is research behind it, you know what you’re buying and it’s in line with your broader account’s risk level.

So far, we’ve talked about investing pretty much in a vacuum but don’t forget the whole process is meant to serve you and the life you live outside of the markets. That means we need to factor in our life goals to make it all relevant and these can, and do, change. That asset mix that was set up to help with the house deposit might not suit a parallel goal like early retirement or the one after it like a kitchen extension. Then there are the curve balls life throws at us all like changes in family and worklife - whatever you go through, make sure to reassess how your portfolio supports your needs. Risk tolerance, ability to invest, time horizon - these are the factors to keep in mind when you’ve got an eye on your financial goals. When life changes, they might need to, too.

Even if you’re a bottom-up stock picker who prefers to scour the market floor rather than respond to the top-down global economic stage, you still need to have an idea of what’s happening in the world. Inflation, interest rates, employment data - these are just some economic indicators to keep abreast of because of how far-reaching their effects can be.

This doesn’t mean trading outside of your risk parameters every time inflation data comes in, though. Rather, staying on top of the bigger picture can help you feel more informed about changes in your portfolio. No-one likes to see big swings in account value but context goes a long way to settling the nerves, especially when you’re able to mentally connect the dots to how your assets are set up to deal with whatever’s happening on a global level.

With all the newsletters out there it’s never been easier to have a wrap-up of market-moving events drop into your inbox, which is both a blessing and a curse. Try to whittle down your sources to a trusted few and avoid the ones with alarmist headlines. The goal is to find the signal amid the noise and stay informed without feeling pressured to act.

Important information

When investing, your capital is at risk. The value of your investments, and the income you receive from them, can go down as well as up and you may get back less than you invest. Forecasts aren’t a reliable guide to future results or returns.

Make sure to do your own research on what investments are right for you before investing or consider seeking expert financial advice. Please note that this article is meant for information and does not constitute any financial advice. This is not an offer, recommendation, inducement or invitation to buy, sell, or hold any securities, or to engage in any investment activity or strategy.