We save for retirement and invest in stocks to give an incremental edge on returns. Portfolio Managers are a go-to for many of us. While Portfolio managers might think about your best interests in terms of money gaining, you should be in control of your own investments. Portfolio managers select an appropriate mix of investments and make discretionary adjustments to your portfolio. However, it would still make sense to know where your manager is investing your money and take some extra steps to ensure that your savings are invested in the right avenues. Below are some of the money-saving tips for personal Portfolio Management and investment.
1. BE REALISTIC
“Only buy something that you would be perfectly happy to hold if the market shut down for 10 years”
– Warren Buffet
Are you getting into stocks with the expectation that quick riches soon await? Such returns generally cannot be achieved unless you take on a great deal of risk by, for instance, investing more than your financial capacity. However, we consider this more of speculating rather than investing. Investments return are over a period of time. Some investments might give good returns in the immediate future; however this is not true in most cases. Investing is a game of patience and you should never make decisions in panic. Make sure that you have enough financial contingencies to support your future to take you through rough markets and help you stay invested until stocks take the upward trend again. More often than not, the market turns favorable after a downward collapse and it is all about the timing.
2. DIVERSIFY YOUR INVESTMENTS
Investing all your funds in a few stocks might not be the best strategy. There are good chances that you might lose your savings when the investment is not wisely distributed. If you concentrate all of your bets in one sector and the sector gets a downward hit, you will be losing out big time. Choose stocks wisely and distribute them over multiple sectors so that the downfall of any single sector cannot impact your overall investment portfolio.
3. DO YOUR RESEARCH
Simple investing is easy, but successful investing is tough. You should support stock investment with adequate research. To start with, know the business model of the company that you want to invest in. What does the company manufacture? What services does the company provide? How does the company earn money? Is it a market leader? What makes the company better than its competitors? Such basic information is very easy to find on the company website.
4. UNDERSTAND YOUR RISK TOLERANCE
By understanding your risk tolerance, you can avoid investments that are likely to make you anxious. After all, who wants to lose sleep fretting over investment risks? Make sure that your investments are set-up in a place where you feel both financially and emotionally comfortable. Excessive investing over and above your financial capacity can put you in risk of huge losses.
Money-Saving Tips Wrap Up
If you learn about the risks of investing and do your homework on individual investments, you can make decisions that will help you meet your financial goals. Follow these money-saving tips and Understand your investments; that is the key to good returns!