What do you want your money to do?
Start with your life: what are you saving for, when might you need the money, and how would a fall in value affect you? These questions help shape a plan that fits you. A portfolio focused on shares can rise and fall sharply, so it won’t suit every goal.
Why do you own each investment?
Some investments are intended for long-term goals; others may have a shorter-term or more specialised purpose. You should be able to understand why something is in your portfolio and how it fits with everything else. If the explanation feels complicated, ask your adviser to walk you through it.
Are you spreading your risk?
Owning several funds doesn’t always mean your money is spread widely: they may invest in many of the same companies. Your adviser can help explain where your investments overlap. Spreading investments across different areas can help manage risk, but it cannot remove the possibility of losses.
Can you get your money when you need it?
Money for near-term bills or commitments has a different job from long-term savings. Some investments can be difficult to sell, especially private investments. Before committing, ask how you could get your money back, whether you could be asked to contribute more, and whether you could afford to lose the amount invested.
What should you know about a private investment?
A private investment is an interest in a business or arrangement that is not traded like an ordinary listed share. Information may be harder to obtain and an exit may not be available. Ask what you own, what you pay, what could go wrong and what rights you have. A possible tax benefit is only one consideration, not a reason to overlook the risks.
What will you pay—and when should you revisit the plan?
Ask for a clear explanation of advice fees, investment expenses and any other charges. Discuss how regular contributions and one-time deposits fit your budget. If your goals, income or need for access to money change, let your adviser know so the plan can be reconsidered.
QUESTIONS TO HELP YOU DECIDE
What should you ask?
- Why do I own each investment?
- Am I investing in the same companies through different funds?
- Could I be asked to put in more money?
- What will I pay, and how can I get my money back?
- What would cause us to change the plan?
Further reading
Use this guide to understand the topic and identify what needs checking. Your own circumstances and the applicable documents determine which choices may fit.