Understanding Your Portfolio: All You Should Know

Sep-20-2021Blog by – Mr. Ashish AjmeraRead Time: 4 Min.Word Count: 495
787Understanding Your Portfolio: All You Should Know

The term ‘portfolio’ refers to the collection of financial assets such as stocks, bonds, commodities, cash and any other investment owned by an investor. Hence, investment and portfolio management are considered crucial aspects to earning higher returns.

Your portfolio is based on several aspects:

·         Risk Appetite

Are you a risk-taker or a conservative investor? What kind of risk-return trade-off you are looking at? The answers to these questions will determine whether you want to invest in equity, debt, mutual funds or any other asset.

You can go for an aggressive, defensive, income-focused or speculative portfolio as per your risk appetite.

·         Diversification

You must have heard of the financial mantra ‘Don’t put all your eggs in one basket. This is known as diversification. It means that you should divide your portfolio across different financial instruments and sectors. This will not only reduce the risk but also maximize the returns.

For example, you can allocate in part equity and part debt, choose stocks of different sectors or invest in small-cap, mid-cap and large-cap companies based on market capitalization.

·         Investment Objective and Time Horizon

The purpose for investment and how long you want to stay invested are important determinants in a portfolio.

For example, buying a new car is a short-term goal and you may want to invest in fixed-income funds. On the contrary, it is recommended to invest in equity if you are planning for a long-term goal such as retirement.

·         Market and Stock Research

You must conduct thorough research on market trends and stocks you want to invest in, especially if you are a beginner or an amateur. Avoid the herd mentality and invest only according to what serves your investment goal.

Check the company’s financial reports, reputation, the background of management board members, the performance of previous stocks, etc. You should also study the socio-economic, political and other macroeconomic factors that influence your portfolio.

·         Portfolio Monitoring

Portfolio management analytics is integral to understand the performance of stocks and decide whether you want to invest more or withdraw the investment. You should track your funds on a fortnightly, monthly or quarterly basis, depending on the type of asset.

A daily check can lead to panic and may not give an accurate picture given the dynamic tendency of the stock market to fluctuate. However, do keep a tab on the latest news and updates about the company and stock market.


Your portfolio is the foundation of your investments. You need to do asset allocation carefully and manage it smartly regularly to optimize the returns and lower the risk of losses. Hence, it is advisable to partner with a portfolio management company that can manage your investments effectively.

Professional portfolio management services not only save you time and effort in monitoring but can also provide you with timely advice related to financial markets. Make sure that the portfolio management company has the necessary expertise and long-standing experience in investment services.

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