Regular care and attention are vital to keep your investment engine purring.
Buying an investment is like buying a car. You do the shopping around, look at the ads, talk to your friends, have debates about whether or not you can afford it, and finally make the big decision.
But unfortunately, for many investors, that’s where the similarity ends. While their new car is pampered, polished and protected, their investment is more likely to be stuck away at the back of the kitchen drawer. While their valuable motor vehicle dominates much of their waking thoughts, their valuable investment is out of sight – and sadly, out of mind. These people keep their cars in excellent condition over the years by regular servicing; prompt attention to mechanical problems, even a cut and polish every now and then. Unfortunately, while they protect their cars from the adverse effects of time and environment, ever-changing conditions chip away at their other valuable investment.
This is true for so many investors – despite the fact that, even with proper attention, investments can continue to grow in value, while cars almost always depreciate – no matter how many waxes and polishes they get!
Lack of attention and ‘fine tuning’ to your investment plan may mean it won’t keep pace with inflation or with the inevitable changes in your circumstances, and its performance may disappointment you.
Investments should suit your needs
While most of us would love to be behind the wheel of something exotic – a Porsche, a Ferrari, perhaps a GT 350 Mustang or even an RS Camaro – the truth is such a car is not likely to meet our needs. Apart from the fact that we’d need to win Lotto to buy it, what many of us are really looking for is an economical family car, or something to pull the caravan, or a wagon to take the family on holiday. The point is we all have different needs, so we buy a car to satisfy those needs.
It’s the same with investments. Everyone has different needs and circumstances. What may be a good investment for one person might not suit another.
There’s another important issue here. Say you do go for the sporty little cabriolet – that’s fine while there are no more than two of you to drive around and you haven’t bought your first house. But in a few years, with a mortgage beckoning and a car-full of passengers on the way, it’s time to reassess your situation. Needs change over time, and what was right for weekends away camping isn’t so right for the pram, the port-a-cot and the high chair. Likewise, that financial plan you worked out with your financial adviser a few years ago may not cover today’s needs – so get it out, check it over and update it to suit your present and future requirements.
One last thing: when we take our trusty wheels in for a service, we don’t just scratch our heads and say “Well, I guess it’s going OK” – we give the specialists something to work on. There’s a slight oil leak, the left headlight needs aligning, one of the windows doesn’t wind up properly and the engine’s just a bit too thirsty.
Give your financial adviser something to work on too: what are you trying to achieve with your investments? Is there anything concerning you about their performance? When would you like to retire? How comfortable are you with a degree of investment ‘risk’ to achieve higher returns? How much extra could you put into a super scheme to make your retirement dreams possible?
So next time you’re giving your car some TLC, don’t forget your investments may need a bit of a spit and polish and expert attention too!