A well maintained portfolio is a very important ingredient to come up with the recipe of success. What we mean to say is that you cannot just start investing without taking time to build an excellent portfolio.
For starters, you need to make sure that your portfolio meets the requirements of your future capital goal. In addition, the way your portfolio is constructed should also give you some peace of mind in the way that it reacts to market peaks and valleys.
Overall, what you really need is a systematic approach to building your portfolio.
Here are three of the best advice that investors can ponder on when building their very own investment portfolio.
Advice 1: Do not forget to have a solid plan.
When you’re entering a war, you’re primary goal is to outperform the enemy and make him surrender. You need to be ten steps ahead of him as much as possible. However, you cannot do that if you don’t have any battle plan. Mere guts and guns wouldn’t be enough.
And it’s very much the same with building a portfolio. You can start dumping in chunks of investments on it, but if you don’t have a plan, you wouldn’t get a clue on how well or how badly your portfolio will perform in the real battle.
Specifically speaking, a well-planned portfolio is a well-diversified portfolio that sports different investment vehicles and exchanges, while you keep an eye of sectors and markets that have a huge potential to have stellar performances. Last but not least, a well-planned portfolio also takes into account your risk tolerance and willingness to try new strategies.
Advice 2: Prioritize quality over quantity.
Bear in mind that one high quality book can beat a series of 10 badly written books. It’s very much true in the case of portfolios.
Most of the time, it’s not the number of your holdings that makes your portfolio profitable, but the quality of the holding within the portfolio.
The underlying fundamentals of each of your holdings should back up the perceived strength of such an asset.
For instance, you shouldn’t add a holding that is currently being propped up without checking the fundamentals, which may go contrary to the perceived strength of the assets.
One fundamentally strong holding can outperform 10 overrated securities.
Advice 3: Have commitment to your goals.
You cannot really expect to get what you want if you don’t know what you want. In fact, even if you somehow gained some riches in investing in the beginning, having no clear goals will still drag you down in the end.
Still, having well-defined goals can still be quite inadequate to help you achieve the success that you want if you are not willing to commit to your purposes.
If you commit yourself to your investing goals, you will have more resolve in doing what you think is best for your portfolio. It will also answer to your dire need of investing direction.
