We've used the analogy that investing can be like a road trip. It can be fun, exciting and, sometimes, you take a back seat and let someone else drive.
Others dislike road trips and try hard to avoid them. It would seem there are a few similarities between driving and investing.
Before you set out on a long drive, a prudent traveller would want to make sure their vehicle can get them from point A to B. You would fill up with gas, check car fluids and tires and make sure you aren't overdue for any servicing or maintenance.
All of this is done to try to avoid an unforeseen circumstance that prevents you from getting to your destination. Things can still go wrong from time to time, but relying on the Scout motto of "Be Prepared" can improve your odds of success.
Investing is similar. We save for retirement, often filling up along the way with extra savings or retirement savings plan contributions. However, we find many investors are not regularly checking under the hood of their investments.
What is working? Is something not working the way it should be? What can be done to fix it? Sure, you might still make it to your destination, but rattling and sputtering along is unnerving and leaves yourself open to potential hazards or a serious breakdown.
What can you do? Schedule regular "maintenance" visits with your advisor. We feel a good advisor is like a good mechanic, reminding you that you are due to come in. Advisors should understand your "destination" and help build a road map to help get you there. Annual reviews should be check-ins to see how things are coming along.
Detours happen in life, but are you still on track? This should not purely be a focus on investments, but what is going on in your life, what has changed and are any course corrections needed?
After this conversation, we recommend looking at the "engine” — or investments.
A few questions you could ask:
• Are you on track to achieve your goal(s)?
• How are your investments doing? What lagged in your portfolio and why?
• How did your investments perform compared to others?
• Are changes required now or does it make sense to wait? What is the risk of doing nothing?
• What do any changes cost?
• When do we next meet?
Last year was a bumpy ride for many investors. You should feel confident and comfortable with who is helping you get to your destination. If you do not feel you are getting serviced accordingly, perhaps it is time for a change — or at least time to obtain a second opinion.
Until next time, invest Well. Live Well.
This document was prepared by Eric Davis, vice-president, portfolio manager and investment advisor, and Keith Davis, investment advisor, for informational purposes only and is subject to change. The contents of this document are not endorsed by TD Wealth Private Investment Advice, a division of TD Waterhouse Canada Inc.-Member of the Canadian Investor Protection Fund. All insurance products and services are offered by life licensed advisors of TD Waterhouse Insurance Services Inc., a member of TD Bank Group. For more information, call 250-314-5124 or email Keith.firstname.lastname@example.org.