Auto-Debit Investments Still Require Monitoring: Three Key Things to Watch

Automated investments made through auto-debit features do not mean they can be simply abandoned. Portfolios still need to be checked periodically to ensure they remain consistent with financial goals and the investor’s risk profile.

Nyoman Sukmawati, Head of Wealth Management at Bank Jago, stated that consistency in investing must be accompanied by an evaluation of the funds that have been deployed. “Investing is not just about the consistency of setting money aside, but also about ensuring that the funds placed remain relevant to financial objectives,” Nyoman said.

According to her, changes in financial goals, market conditions, and risk profiles may necessitate adjustments to investment strategies. However, investors do not necessarily need to check their portfolios every day.

There are three key things to consider when conducting an investment review.

First, asset composition. Changes in investment value can cause the portfolio composition to shift. If it no longer aligns with the original strategy, investors can perform rebalancing. Risk profiles can also change alongside life circumstances. For instance, an investor who was previously single might adopt a more aggressive strategy, but after marriage or having dependents, their needs and risk tolerance may change.

Second, investment performance. Investors should not merely look at whether a portfolio is making a profit or a loss. Performance needs to be compared against the investment period, market conditions, and benchmarks. For example, an equity mutual fund that drops by 8 per cent in a month is not necessarily performing poorly if its benchmark has dropped by 10 per cent during the same period.

Third, the intended use of the funds. As the date for using the funds approaches, it becomes increasingly important to adjust the level of investment risk.