While stocks and volatile investments are often profitable in the long run, many can be short term nightmares. If you’re investment plans include short terms goals then you’ll want to manage your portfolio management to lower volatile investments.
- Start by making a list of all your investments. This includes stocks, mutual funds and bonds. Note down the category that they each fall under.
- Find out the beta coefficient of mutual funds in your investment portfolio. This can be done by looking through financial publications such as the Wall Street Journal. If the beta is high then the investment will be more volatile.
- Split your investment portfolio into funds that you can keep long term, and short term. The short term money should be put into risk free investments.
- Take a look at the mutual funds you own to see if they’re diversified. An investment portfolio with good diversification will contain different caps. You can create diversification by purchasing the total stock market index funds.
- Invest some of your funds outside of your home country. This will add diversification to your investment portfolio. It does this because foreign investments aren’t affected in the same way as home country currency.
- You should perform portfolio risk analysis every few months to keep on track with your market. Markets fluctuate and it’s better to stay on top of the changes.
For more information on your investment portfolio contact the Winflow Financial Group.