While developing your investment strategy it is necessary to have the proper mix of securities and assets in your investment portfolio. This will determine your risk and return exposure. However, there are some other factors that will have an impact on your portfolio. If you want to be successful, then these factors have to be taken into account:
- Before you start investing, it is necessary to understand your tolerance to risk. You have to be sure that you are not taking on more risk than your comfort level allows.
- You need to match your targets with your investment strategy. You have to take into consideration that different targets will have absolutely different time frames. It is not recommended to use long term investment when you have short term target.
- It is necessary to remember that your emotions can work against you. Even though you have determined your risk level the money in the investment portfolio is yours and if markets decline you could make a rash decision and take your funds out at the wrong time. If you cannot sit out the dips in the market, then you have to use the services of financial planner.
- It is not advised to re-balance your portfolio quite often. While investing, you are taking a long term view and the risks in long term investments are not as unsteady as in short term ones. When you re-balance quite often, you are taking a short term view into your portfolio.
- It is recommended to establish an emergency fund outside of your investment portfolio to serve your urgent and unexpected needs. In that way you will not have a need to take money from your investment if an emergency should arise.
In fact, developing an investment strategy is more than just putting your money into different asset classes. If you manage to keep the above mentioned things in mind, you will be on your way to have a successful investment portfolio.
- Before you start investing, it is necessary to understand your tolerance to risk. You have to be sure that you are not taking on more risk than your comfort level allows.
- You need to match your targets with your investment strategy. You have to take into consideration that different targets will have absolutely different time frames. It is not recommended to use long term investment when you have short term target.
- It is necessary to remember that your emotions can work against you. Even though you have determined your risk level the money in the investment portfolio is yours and if markets decline you could make a rash decision and take your funds out at the wrong time. If you cannot sit out the dips in the market, then you have to use the services of financial planner.
- It is not advised to re-balance your portfolio quite often. While investing, you are taking a long term view and the risks in long term investments are not as unsteady as in short term ones. When you re-balance quite often, you are taking a short term view into your portfolio.
- It is recommended to establish an emergency fund outside of your investment portfolio to serve your urgent and unexpected needs. In that way you will not have a need to take money from your investment if an emergency should arise.
In fact, developing an investment strategy is more than just putting your money into different asset classes. If you manage to keep the above mentioned things in mind, you will be on your way to have a successful investment portfolio.
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