All investors always lay meticulous plans to ensure that their investments work just as hard as them. The harsh reality is that even these well researched and laid plans have the potential of going sideways when the tough gets going.
When this happens, the writing will always be on the wall so that you know whether to jump ship or use the ship to build lifesaving rafts and paddle to safety. Here are some of the indicators to look out for.
Negative cash flows
The first rule of investment is that it is supposed to generate you income. Cash flow will, therefore, be the greatest indicator of whether your investment is doing alright or will become worthless in the near future.
A negative cash flow shows that the payments the investment makes exceed the cash it receives.
Numerous lawsuits against investment
Lawsuits are never a welcome adventure for an investor. More so if you are losing them. However, not all investments should be wary of lawsuits. There are those which have the financial bankrolling to sustain these, but not all.
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If your investment is still scrambling, then a pile-up of lawsuits drains money from it in the forms of settlements.
High debt-equity ratio
The interests your investment pays puts a lot of pressure on its cash flow. If the debts are too high, especially for a struggling investment, then you could be actually paying more than you are getting in return.
An investment whose fortunes are dwindling also pays higher interests, further straining the income. Your investment then has a higher risk of becoming bankrupt.
The profits warnings from your investment should be taken very seriously. If you were getting profits of upwards of €2,300 (hypothetically) then it reduces to below €500, then you know something is seriously up with your investment.
The decrease in profits is normally accompanied by another decline in the share prices of the investment.
Increasing amounts in unused bills
If you are using your pension (s) for your daily needs, then an accumulation of unused bills could be draining you dry more than you think. Take an example of Gym membership fees. If you pay a monthly fee, but only go once or twice, then the rest of the days are wasted.
This money lost could have been utilized somewhere else.
When you notice that your investment is no longer performing like it used, you should take immediate action to either save it or count your losses and jump ship.