Becoming a Successful Investor: A Whistle-Stop Guide to Portfolio Management

The health of your investment portfolio should be one of your top priorities as an investor, and truthfully, managing a portfolio does indeed pose challenges. It takes a lot of work on your part; you need to learn more about investing as a whole as well as developing a good gut feeling. You could choose to have someone else manage your portfolio, but there is a cost to this, and it also means relinquishing control. Luckily for you, it is entirely possible to manage your own portfolio, which is why we have put together the following tips, so; let’s get into it.

Portfolio Management Explained

Portfolio management is pretty straightforward; it simply refers to the acts that you need to undertake in order to keep your investments ticking along. If you want to successfully manage your portfolio, you need to be able to see the big picture. You can choose between taking an active or passive approach. Passive management is probably the better choice for beginners; you choose long-term investments and patiently wait for them to mature. Active management, as you will probably guess, is a lot more involved with buying, selling, and trading investments regularly.

Asset Allocation

Asset allocation is one of the fundamental elements of managing an investment portfolio. A robust portfolio that can withstand risk needs to have a good mix of assets. The assets that you choose will depend on what you can afford to invest and where your interests lie. Luckily, there are a number of resources available which can help you to work out which assets would be the best choice for you; for example, TradingView has the economic calendar which can give you insight on world economic events. Asset allocation should be approached with a diversification mindset. This helps to spread the risks when investing.

Rebalancing Your Portfolio

Lastly, regardless of whether you choose to take an active or passive approach to your portfolio management, you will still need to make an effort to rebalance it. If you are waiting for your investments to mature, then this could perhaps only be done once a year or so. If you are taking a more active approach and buying and selling investments regularly, then it would make sense to do this more often or at least once every financial quarter. Rebalancing a portfolio simply refers to the act of re-establishing the different mix of asset allocations to ensure that it isn’t overly weighted in one specific area. This, again, is done to help mitigate risk.

To Sum Up

Becoming a successful investor is not easy, and, of course, there is more that will go into it than the advice outlined above. Learning as you go is perhaps the best thing that you can do. Trial and error is to be expected. This is precisely why you shouldn’t invest large sums of money when you are just starting out. Instead, start small and build up your portfolio over time, investing incrementally as you learn more and your confidence grows.