Monitoring Your Investments

By: AARP Outreach & Education | Source: AARP.org | March 20, 2005

Keep an eye on your investments to make sure they continue to perform and meet your financial needs.

1. Consider using portfolio accounting software.

Portfolio accounting software for your computer can make monitoring your investments an easy task. You'll be able to tell at a glance how well your investments are doing. More important, you'll be able to tell how much your investments are costing you.

Portfolio accounting software will keep track of your deposits and withdrawals. Programs can also calculate your "real" rate of return. This figure is important. It tells you what your return is after you've paid all trading costs. Check with your favorite computer software supplier for recommendations on portfolio accounting software.

2. Keep up with the financial news.

Major daily newspapers report on stock, bond, and mutual fund prices. Personal finance magazines can also be helpful. You can get useful financial information on the Internet, but make sure you trust the source.

3. Read your account statement carefully.

Your brokerage firm will send you an account statement each month that shows how much your portfolio is worth. Read each statement carefully. Check your current statement against previous statements and make sure all investments and transactions you've made are accounted for accurately. If you have a question, call your broker immediately. If you don't get satisfaction from the broker, send a letter either to the Financial Industry Regulatory Authority (FINRA), the North American Securities Administrators Association (NASAA), the Securities and Exchange Commission (SEC), or your state's securities regulator. Be sure to keep all your account statements for tax purposes.

4. Review your investments once a year - or when your personal circumstances change.

Retrace the steps you followed when you originally researched your investment. Check recent issues of business publications to see what financial writers are saying about your investments. Review your investment's rating with independent rating services. Read the annual report you receive from your mutual fund. Check your investment's return. Compare your investment's average rate of return over the past 3-5 years with the appropriate index.

5. Be smart about poorly performing investments.

Even if your annual review uncovers some troubling trends, don't be too quick to sell. Resolve to watch your troubled investment a little more carefully for a while. Schedule another review in six months. Then see how things look.

You'll need discipline and patience to endure the rough rides that are an inevitable part of investing. Remember: stocks that go down in value usually go back up sooner or later. Selling too soon may mean that you'll miss out on the gains you would have earned when the stocks eventually rebounded.

For More Information

FINRA offers mediation of disputes between you and securities firms and their representative.

The SEC has a wealth of information for educating individual investors, including information about online trading. There's also a form for filing an online complaint about your broker or adviser.