Analysing your portfolio

Key takeaways

• Ongoing analysis could inform your investment decisions and help keep you on track to reach your financial goals. 

• Understanding ROI can help measure how your investments are performing.

• CMC Invest provides extensive charting and information about your portfolio’s performance.

When you’re working towards a goal, it's always important to stop and assess your progress. Analysing the performance of your investments is crucial in order to ensure you're on the right track to reach your goals.

Why analysing your portfolio is important

Analysing your portfolio, or a specific investment, can be more than just looking at how much shares are worth. Think of analysing and understanding your portfolio’s performance as a way for you to keep your finger on the pulse. By tracking performance, you might be able to see whether your investment choices still align with your goals or if you may need to make adjustments. 

Market movements are important to consider as any sudden changes to the economy or company can influence how your investment performs. So, by monitoring and analysing investments, you can respond to these changes if needed. 

You don’t need to be an expert like Warren Buffett when analysing your portfolio. A broad understanding of what is happening in the markets can be a good starting point. CMC Invest's Analyst team will keep you up to date with information about market movements and earnings reports from some of the biggest companies. 

How to calculate returns on investments

Depending on your experience, time available, or investing goals, there are several ways to calculate the return on your investment (ROI). This information could help you understand how your portfolio is performing in relation to your goals. 

CMC Invest gives you a simple breakdown of information to show the Profit & Loss of your portfolio. You can find this under Holdings > Profit & Loss to get a snapshot view of your portfolio, including the daily gains of a particular holding. 

Bear in mind that ROI data shouldn’t be an investor’s sole source of decision-making. It’s easy to fall into the trap of making impulsive choices based solely on the performance of an investment. Short-term fluctuations in a stock’s price might not actually reflect its true potential. Being reactive to short-term changes could steer you away from your overall investment strategy. 

When to analyse your portfolio

There is no right or wrong answer to how often you should analyse your portfolio, but defining your goals can help you understand how frequently you might want to check in on your performance. That said, actively managing your portfolio allows you to better understand what is going on. Doing so can be a helpful way to manage any emotional or reactionary response to the constant changes in the stock market.

Depending on your experience, analysing the performance of your portfolio can require some ongoing work. However, being proactive could help you build a portfolio that aligns with your long-term objectives. After analysis, your options could be more informed, whether continuing to invest regularly, holding onto your shares, or deciding to sell. Remember that any adjustments to your portfolio should still align with your overarching investment strategy and goals. 

When expanding a portfolio, some investors like to take the same approach as when starting out. That might include revisiting the research phase and applying any knowledge gained from assessing an investment’s current performance.