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