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Investment Tips to Build a Successful Portfolio



December 03, 2017 – Comments (1)

It is easy to get lost in the world of investment. There seem to be too many opportunities and you want to use them effectively. Creating a successful portfolio is a difficult task. You will unavoidably make some mistakes finding the perfect balance. The important point is for you to understand the logic behind every step you make. Here are some of the investment tips to improve your portfolio. 


Do Not Risk Everything

One of the mistakes a beginner investor can make is to have a lot of money in a single stock (usually blue chip stocks). No matter how stable and successful a company may seem, there is also a probability of it going bankrupt at some point. There is no need for creating major risks when you can easily avoid it by finding companies with similar characteristics. You can diversify your portfolio by choosing various sectors, industries, and even countries. One more tip for those who plan to invest internationally is to learn foreign languages. For instance, if you plan to invest in a French company, do not use an English to French translation service but learn the language instead. Doing so, you will be able to read the local news and communicate with local experts to try to avoid any unexpected surprises.


Don't be Fooled

Some investors decide to include last year's best-performing stocks and funds into their portfolio. Markets can get very unstable and it is not a smart move to rely solely on the performance history. There are many factors you should consider before committing to a specific investment idea. You will be able to gain a lot more by monitoring out-of-favor asset classes and being patient. Waiting for the right moment can be effective tactics. Pay close attention to the volatile investments as you can spot a moment when their price decreases dramatically and you will profit handsomely.


Control Costs

It is easy to forget about the regular costs you have to pay when everything you can think about is gaining profit from your investment decisions. However, those fees play a significant role as well because you can't convert them into something profitable. Remember to estimate all those brokerage commissions, sales loads, and mutual fund expense ratio charges. This is the money you will never be able to return. Try to minimize these costs if you can.


Consider Investing in Cryptocurrency

There are two groups of people - those who think that cryptocurrencies have no bright future and those who think their price will increase with geometrical progression. If you have strong faith in Bitcoin and Ethereum, consider investing in them. Many investors expect Bitcoin to compete with global banking systems and become a major alternative to the currencies of today. You can consider this investment an experiment and not to invest more than you can lose. It is better to diversify and invest in different cryptocurrencies as you never know what can happen in the future. 


Make Sure You Know the Reason

If you can't give a clear explanation of why you have made a particular investment, there is a problem. A good investor knows what role each of their investments plays in the portfolio. You need to be able to estimate the benefits you gain from every investment and keep in mind the tradeoff between risk and return. A friend mentioning the good performance of a particular company is not good enough reason for you to start investing in it. Neither is a TV investment program's episode. Check every detail on your own and make sure you have a specific reason for buying.    


1 Comments – Post Your Own

#1) On December 04, 2017 at 3:57 AM, marthasimons (< 20) wrote:

so good

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