In our series of the most commonly asked questions, this has got to rate as the 64 million dollar question. The only answer that is certain though is that your investments are probably not making 64 million dollars unfortunately!

What we can say, however, is that it is important to always view your investments in the context of your overall financial planning, not just in isolation. It is not about performance in and of itself but rather in relation to whether your financial plan, and the investments within it, are on track to help you achieve your goals.

It is also crucial to consider your investments over a long period not just at a snapshot in time. This is especially true in the current climate, when the markets have been particularly volatile in relation to the Chinese economy among other factors. Warren Buffet, the most successful investor in the world, always advises to invest for the long term, stating that you should ‘Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” and that “If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.”

We’re all familiar with the caveats, ‘funds will go up as well as down’ and ‘past performance may not be an indication of future performance’ so if your investments are in equities you will know that to a certain extent you just have to accept that this is the reality and take the rough with the smooth.

So it may be more relevant to ask slightly different questions. Are your investments structured correctly, for example, to give you the right amount of balance in your portfolio? Are your investments in line with your current risk profile? Your investments could always make you more money but they might expose you to an unacceptable level of risk at the wrong stage in your life. As your circumstances change, your goals will shift accordingly so it may be that you want to settle for lower returns in the knowledge that it is a safer proposition or it could be that you are in a position to take a greater level of risk for potentially higher returns.

Another fundamental question is what is enough? Again it all comes down to your objectives and expectations. What is enough for one person may be very different for another. So the question you may need to be answering could be not ‘are your investments enough?’, but, ‘how have the funds performed since your last review?’ Is a pattern emerging and is your plan going to enable you to do what you want to do or do you need to take action?

One thing we would say with resounding certainty is that it is vital to have regular reviews. You will receive a detailed report of how your investments are doing and can analyse with your adviser whether they are indeed on track. Each snapshot will enable you to build up a reliable and informative picture of your investments over a longer period of time so that you even if you can’t answer the 64 million dollar question, you can make financial decisions with confidence.