Strategising for the new year

The COVID-19 crisis has affected the entire world economy and some key sectors of the African economy are already experiencing. This has also impacted capital markets investors with some failing to stick to their investment strategies for the year 2019. Some even lost sources of income and they are not in a position to invest at the moment. Be that as it may, it’s now less than sixty days before the year comes to an end. Most companies have started strategising for the new year and if you are serious about growing your investment portfolio now is the time to start strategising for 2021. You should not wait until the year has begun. You can make a head start by having an investment checklist that will help you manage and get your portfolios ready for the new year.

Time passes very quickly one minute it’s January, the next, it’s June. Don’t let the year slip by and end up in a last-minute scramble again next year. Instead, put some appointments on your calendar to check on your portfolio. No need to block out more than an hour every day; rather, the point is to create a habit that’ll reduce end-of-year surprises. The frequency is up to you, though once a quarter should be sufficient.

The changing calendar year offers an opportunity for investors to take a look at the portfolio and see what worked in the past 12 months and what didn’t. It is also a time to reflect and ask yourself some tough questions. Did you start the year steadily adding money to your portfolio and trail off? Did you load up on a particular sector of shares and neglect others? As you reflect, ask yourself one more question: Is it time to bring in help? If managing your investments always seems to get pushed aside in lieu of, other goals, then working with a financial advisor may help keep you on track. These are some of the questions which can allow you to make better decisions in 2021 and you need to be honest with yourself.

This time of the year is a good time to check your portfolio’s diversification among assets, such as shares bonds and unit trusts. You want shares, bonds and unit trusts representing different company sizes, industries. Diversification reduces your investment risk by ensuring you’re not overly exposed to any individual investment. Re-balancing is bringing your portfolio back to your original asset allocation mix. By re-balancing, you’ll ensure that your portfolio does not overemphasize one or more asset categories, and you’ll return your portfolio to a comfortable level of risk. By including asset categories with investment returns that move up and down under different market conditions within a portfolio, an investor can help protect against significant losses. History has proven that no assets move up and down at the same time. Market conditions that cause one asset category to do well often cause another asset category to have average or poor returns. By investing in more than one asset category, you’ll reduce the risk that you’ll lose money and your portfolio’s overall investment returns will have a smoother ride. If one asset category’s investment return falls, you’ll be in a position to counteract your losses in that asset category with better investment returns in another asset category.

All the best as you start preparing your investment strategy for the coming year. Do not wait until you have surplus money to invest. Start small and grow from there. Remember procrastination is the thief of time.

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