Bonds and Shares
28/09/2015
Are you checking your portfolio too often?

Once you have invested in a portfolio it is tempting to monitor your investment regularly ensuring you are getting the return you are looking for but it may be wiser to resist this temptation and instead check your portfolio just one or two times a year.

As we have discussed in previous articles, the markets are volatile fluctuating in value from day to day. So if you check your portfolio every day you have a 50% chance of seeing positive results and a 50% chance of seeing some part of your portfolio losing value. The stock markets are volatile. Over long periods of time, they tend to go up. But on any given day, it's more or less a toss-up. In reality, even when the markets are up, some investments on your portfolio are likely to be making a loss. Professor Daniel Kahneman, a renowned psychologist notable for his work on the psychology of judgment and decision making as well as behavioural economics, explains that investors are naturally prone to loss aversion. This means that a slight loss in value of one asset is more disappointing than an equal or better increase in value in another - we all hate losing money more than we like making it. The sting of a loss weighs heavily on our minds.

Wealthfront, an automated investment service firm based in California, USA, links this loss aversion to investors over-thinking their investment portfolios leading to a decrease in returns over the long-term as they are more likely to move into a more conservative portfolio than they otherwise would do. The fear of making a long term loss may also prompt investors to make rash decisions based on daily market fluctuations or even good news about a company.

You may wonder why we are advising against checking your portfolio too often when our eWealth platform is designed precisely to give you the opportunity to monitor your investments at your leisure. It is your investment and you have a right to know how your funds are performing and to make adjustments to your investments as you deem fit so we provide you with the tools you need to do so. You just do not have to use them every day.

Indeed, the more time you spend looking at and worrying about your portfolio, the more likely you are to make changes to your plan, whether that's withdrawing money or adjusting your risk tolerance - and over the long term that will lead to lower returns.

As already mentioned stocks go up and down and investments should be seen as long term, so checking them too often seems futile, it is irrelevant how they do today or how they performed yesterday.

So, when it comes to your portfolio the best advice is to ensure you invest in a diversified portfolio that is tailored to meet the level of risk you are willing to take and then monitor your investments every few months with a major review every year, including one with our licensed Financial Advisors. In the meantime, unless you need to increase or cash in your investment, it is advisable to leave your portfolio untouched. You can always talk to your relationship manager at Mediterranean Bank, who will be able to review the performance of your model portfolio.

 


 

Qed tiċċekkja l-portafoll ta' investimenti tiegħek spiss wisq?

Meta tinvesti f'portafoll, huwa komuni li tiġik il-kurżità u toqgħod tara kif ikun sejjer l-investiment tiegħek ħalli tassigura li qed tieħu lura dak li tixtieq. Imma aktarx li jkun aħjar jekk tirreżisti din it-tentazzjoni u, minflok, tiċċekkja l-portafoll tiegħek darba jew darbtejn biss fis-sena.

Kif tkellimna fl-artikli li għaddew, is-swieq huma instabbli u l-valur tagħhom jitla' u jinżel minn jum għal ieħor. Jekk tiċċekkja l-portafoll tiegħek kuljum, għandek 50% (ħamsin fil-mija) ċans li tara riżultat pożittiv u 50% (ħamsin fil-mija) ċans ieħor li tinnota li xi parti mill-portafoll tiegħek ikun qed jitlef fil-valur. Is-swieq tal-istocks jew ishma mhumiex stabbli. Meta tqishom fuq medda ta' żmien dawn għandhom it-tendenza li jitilgħu imma, b'mod ġenerali, huma imprevedibbli. Fil-verità, anke meta l-valur tas-suq ikun għoli, aktarx li jkollok xi parti mill-portafoll tiegħek li jkun qed jitlef il-valur. Kif jispjega l-Professur Daniel Kahneman, psikologu rinomat għal kwistjonijiet marbuta mal-ġudizzju u t-teħid tad-deċiżjonijiet u għall-imġiba relatata mal-ekonomija, l-investituri huma suxxettibbli li jħossuhom imdejqin meta jaraw il-valur tal-investiment tagħhom nieżel. Dan ifisser li tnaqqis żgħir fil-valur għalihom hu ta' diżappunt akbar minn żieda tal-istess rata, jew ogħla, fil-valur ta' investiment ieħor li jista' jkollhom - bħala bnedmin niddejqu aktar nitilfu l-flus milli meta nagħmlu l-flus. Id-dispjaċir tat-telf ittaqqlilna moħħna aktar. Wealthfront, il-kumpanija tas-servizzi ta' investiment awtomatiku, ibbażata f'Kalifornja, torbot dan id-dispjaċir tat-telf ma' dawk l-investituri li jaħsbu żżejjed fuq il-portafolli tagħhom u dan iwassalhom biex inaqqsu d-dħul mill-investimenti tagħhom stess fuq perjodu twil għax hemm ċans kbir li jagħżlu portafoll aktar konservattiv. Il-biża' li, fit-tul, ikollhom telf iwassalhom jieħdu deċiżjonijiet ta' malajr ibbażati fuq iċ-ċaqliq ta' kuljum tas-suq, jew fuq aħbarijiet tajba minn xi kumpanija jew oħra.

Tista' tistaqsi għala qed nirrakkomandaw li ma tiċċekkjax il-portafoll tiegħek ta' spiss meta l-eWealth platform tagħna hi mfassla preċiżament biex tagħtik l-opportunità li tissorvelja l-investimenti tiegħek meta trid. Nifhmu li dan hu l-investiment tiegħek u għandek kull dritt tkun taf kif sejrin flusek u li taġġustahom meta tħoss il-bżonn. Għalhekk noffrulek l-għodda meħtieġa biex tagħmel dan. Kull ma qed nissuġġerixxu, pero, hu li ma tagħmilx dan kuljum.

Aktar ma tqatta' ħin tiċċekkja u tinkwieta fuq il-portafoll tiegħek, aktar hemm ċans tbiddel il-pjan tiegħek, kemm billi tiġbed flusek u tneħħi l-investiment jew inkella billi taġġusta l-livell tar-riskju - u fuq medda twila dan iwasslek għal inqas dħul.

Kif diġà semmejna, l-istocks jew l-ishma jitilgħu u jinżlu, u l-investimenti għandek tarahom fuq medda twila ta' żmien. Għalhekk, għalxejn tiċċekkjahom ta' spiss għax huwa rrelevanti kif imorru llum jew kif marru l-bieraħ.

Il-parir tagħna għalhekk hu li tinvesti f'portafoll diversifikat, imfassal għal-livell ta' riskju li tixtieq tieħu, u li tissorvelja l-investimenti tiegħek kull ftit xhur b'ħarsa sħiħa darba fis-sena, inkluż reviżjoni ġenerali ma' wieħed mill-konsulenti finanzjarji liċenzjati tagħna. Sadattant, sakemm ma tridx iżżid jew tiġbed il-flus fl-investiment tiegħek, nirrakkomandawlek tħalli l-portafoll jaħdem waħdu, kif inhu. Inti tista' dejjem tkellem lir-Relationship Manager tiegħek ta' Mediterranean Bank, li jista' jara u jgħidlek kif ikun mar u kif inhu sejjer l-investiment tiegħek (tal-Model Portfolio).

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