What Are Some Tricks to Successful Investment Portfolio Management
Many a time, you as a newbie investor have heard the phrase investing is simple. The term is true, yet, you must remember that investing is not easy at all too if you don't keep your investing basics straightforward. So, keeping those in mind it is essential for one to reach the stage of financial independence as then you would have the collection of assets, which creates passive income for you, apart from the regular one.
Here are some key useful tips for successful investing and portfolio management:
Keep a Margin of safety while making investments
This is the single most important thing that you must abide by to protect your portfolio. To incorporate this principle, you can follow two strategies.
First one is to stay conservative while making valuation assumptions and future growth predictions for the businesses/stock/bonds that you have invested in to determine the potential return.
Second, you must always purchase your assets near the estimated intrinsic value made by you for your investments in case of high performing businesses. On the other hand, for other business (average performing) always purchases assets below the estimated intrinsic value.
Make Investment in Assets that you understand most
Shockingly, but is it true, that many investors, today, invest in companies, that they do not know properly or are outside their knowledge base. Many investors with the so-called fear of being left out invest in industries/businesses, whose economics they don't understand.
The great Warren Buffett also suggested this to newbie investors back in 2002, as he said I dont know anything about telecom. It doesnt bother me. Somebody will make money on cocoa beans, but not me. I dont worry about what I dont know.
An investor must understand that it is not important to understand every advanced investing concept like arbitrage, esoteric fixed-income trading strategy etc. for achieving their financial dreams.
Stay rational About Stock Prices
Investing in stocks that are rising rapidly in price and selling the ones with poor prices at a particular time period is not considered as smart investing. Such investors who behave like this are doing gambling rather than investing. So, in short, assuming that there is constant valuation multiple, the higher you pay for an asset in relation to its earnings, the lower your return. But, sadly people buy such assets/stocks seeing their rapid increase in price.
Avoid paying high brokerage Fee and minimize operating costs
Frequent traders or ones with years of experience are often unable to reap good ROI as they get stuck with brokers or fund management companies, who charges commissions, fees, ask/bid spread combined with taxes. This is one key aspect that most investors avoid and end up giving a high brokerage fee from their long-term profits.
To avoid this, the golden advice is to try and learn the basics of investment so that you can manage your portfolio efficiently. If not possible, you can take help of automated portfolio management solutions like Hey Bitcoin.
Hey Bitcoin is a blockchain-powered portfolio management solution that analyzes the popular traders' portfolio performance across the globe and then compiles them in an individual portfolio to recommend it to investors based on the profitability and risk ratio set by them. That's not all, Hey Bitcoin also offers complete assistance in portfolio creation and management to investors by using advanced technologies like AI, machine learning, etc.
Check out details at https://www.heybitcoin.io/
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