4 Investment tools to help you stay ahead of the curve

With the internet housing a wealth of investment knowledge and new fintech apps making organising your investments easier than ever before, it’s largely unsurprising that more investors are embracing the do-it-yourself approach. Here are a few tools savvy self-directed investors are using to make their investment decisions and build their portfolios.

Robo advice to do the heavy lifting

2017 ASX investor study found that 40% of Australians prefer to do their own investment research and take control of their investments. Although, some investors are choosing not to engage with a financial adviser, they may still like to couple their own research with some guidance, and that’s where robo advice could come in handy.

Robo advice is an online software designed to help users manage their investments and potentially build a better portfolio. Robo advisers use mathematical rules and algorithms to automatically allocate, manage and optimise a client’s assets. They can assist in selecting investments, rebalancing portfolios and placing trades. Another benefit of robo advice, is it can help you avoid making costly investment decisions by taking the emotions out of making a trade. Robo advisers are also typically easy to use and generally have lower fees than traditional financial advice options. Some examples of popular robo advisers are apps like Raiz, AtlasTrend and Stockspot.

Related article: 5 Popular Investment Apps in Australia 

Robo Advisors for Self Directed Investors
Robo advisers can be a helpful tool for self-directed investors

Twitter can help gauge investor sentiment

Social media has developed into more than just sharing your latest holiday snaps and weekend antics. Twitter, in particular, can be a useful tool for investors. If you’re looking for the next big investment trend or for the next big growth story, trawling through Twitter and even just looking at the trending topics can be helpful. Think of it as collecting research for free, it can be a handy tool to gauge public sentiment on just about any topic, and can also be helpful when looking for new investment ideas.

After all, tweets can be powerful. In 2018, reality TV star and business mogul Kylie Jenner famously sent out a single tweet asking if anyone still uses social media platform Snapchat, and soon after $1.3 billion was wiped off the value of the company.

While it’s an extreme example, it does show how investors can use Twitter. With Kylie Jenner admitting to not using Snapchat anymore, investors lost confidence in the company.

Most publicly traded companies also have a Twitter account and by searching for the ticker symbol, you’ll likely be able to get the latest company news and updates. There are also plenty of accounts in the investment space to help investors keep up-to-date including Bloomberg, The Australian Financial Review and, of course, Canstar Investor Hub.

Related article: Understanding Market Sentiment and How It Affects Asset Prices

Financial ratios to crunch the numbers

When assessing where a company may be headed, some investors will look at the economic environment, peruse the annual report to ascertain the company’s future plans and look at the financials. Ratios can help with the third part of that equation. You may have all the numbers, but financial ratios can help make sense of them.

Depending on the type of investor you are and your investment goals, some ratios will be more useful than others. For example, income investors are likely to be focusing on the numbers that can indicate the yield they can expect from an investment. Whereas, growth investors will likely be using financial ratios to help determine the future growth of a company. Here are a few of the most used financial ratios to get you started, but bear in mind ratios are best used when comparing a company to its peers and to the benchmark of an industry.

Related article: 5 of the most common financial ratios 

Financial ratios
Crunching the numbers is an important part of assessing a company. Image source: Roman Samborskyi (Shutterstock)

Investment news and information outlets to keep you informed

Keeping your finger on the pulse is easier than ever before, with a stream of information available and multiple news outlets reporting on market movements and industry changes. The difficulty is deciphering what’s worth listening to and what is just noise. So, finding news outlets you trust is imperative and keeping level-headed is crucial too.

Some that may be worth exploring are Yahoo Finance, ASIC’s Money Smart and Markets live. Some website, such as Trading Economics, can also send market updates directly to your inbox as they happen. And you can set the alerts to follow the markets you’re interested in. For information about different investment products or the fundamentals of investing ASIC’s Money Smart can be a useful resource, and for both news and investment knowledge Canstar Investor Hub can help too.

Cover image: donatas1205 (shutterstock) 

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