Balancing Your Portfolio: 9 Must-Haves in Your Investment Toolkit

  1. 1. Dedication and Effort

You must start as early as you can in investing. The earlier you get to investing the more you will be able to profit. Yes, you read that correctly! Statistics show that time, effort, and consistency outweighs experience and less dedicated time. This means that the more willing you are to be invested in your stocks and investments, the more likely you will profit than a person who has knowledge in stocks and engaged in it for a couple of months. It all begins with patience. The effort you put in will eventually show and it is okay to lose money! The amount of time that is put in will lead to a great learning experience that will climb its way into profit and long-term benefits. This does not mean you should spend every waking hour checking on your portfolio, but it does mean that you will need to go in and revisit your budget from time to time. Remember to keep your future self happy by working on it today! You will definitely thank your past self.

2. Organization

It is SO important to keep your toolkit and portfolio organized. If organized chaos is the move for you, then so be it, but as long as you have some sort of system that you know for a fact will be realistic for you to keep up with. As life has shifted onto digital platforms, it is necessary to keep all documents in folders and external hard drives (such as google docs, google drive, flash drives). The reason for so many outlets is to be sure that important documentation does not get lost in case of your device is unusable for whatever reason. This will also allow you to be able to check your portfolio from any device, whether it is your computer at home or your phone while you are at work.

3. Goals

You need to determine and be mindful of your short term and long term goals. What matters to you? What do you see yourself doing in 5 years? 10 years? How much money do you need for your goals to be achieved? What is financial liberation for you? Would you like to be an entrepreneur? Are you able to handle that sort of responsibility? These are some questions that you will need to answer for yourself to help understand your goals. When there is a game-plan outlined, it will be easier to determine what investments are the right move for you that will help you achieve your goals.

4. Diversity

You will ride a hard wave if you do not concentrate on different types of investments. Diversification of your investments will create less risk. If you are investing your own cash, then it is important to stay on top of it, especially depending on your age. This does NOT mean that you should invest guaranteed returns (debts) or all equity, that would cause lots of risk. It should be a flavorful combination between the two. Be sure that you are comfortable in the methods you are taking, as you do not want your risks to be detrimental and at a place of slow return.

5. Rebalancing

Never try to time the market. The purpose is to reduce risk when managing it, not beat the market. The stock market is fraught, and chances are you will have unlucky predictions that will cause more losses than gains. As you adjust your budget from time to time, you need to also be aware to rebalance your shares. If you are losing too much money, then take a step back, evaluate what you have been doing, and choose a different approach. You do not want to spend extra fees on average and under preforming returns. Rebalancing can happen in two ways: either you can shift your Roth IRAs or you can sell, trade, or buy stocks.

6. Education

This can come down in the dedication and effort section, but it deserves its own category. With the amount you might lack from inexperience, you need to be able to pick up the speed by investing your time in education yourself. There will be so many ups and downs in your investing, but its value is unquestionable. You do not want to put your time and money to waste, when you can learn from others. It is not embarrassing if you know absolutely nothing. Mostly everyone that has been a long-term investor has started inexperienced, and have made mistakes that they are willing to share. Do not be scared to watch youtube videos, connect with people on Linkedin and ask them questions, or elders within your family and friends that have an interest and knowledge in the subject. There are also plenty of books written about any question you may have on investing.

7. Explore and Understand your Choices

Investment can come in so many forms, so it is significant to understand all the choices you are given and choose what suits you the best, or how to deal with all the types you want to do. When diving into further research about all your choices, make sure to go over mutual funds, stocks, bonds, ETF’s and cash.

8. Taxing Strategies

As you get into more long term investments, you are ensuring a less stressful occurrence with stocks and end up paying less taxes over time. Once you gain momentum in capital during your investments, you cannot escape being taxed. However, you can look into a Roth IRA if that is a suitable option for you.

9. Managing Market Risks Long-Term

  • Rebalancing- *stated above*
  • Sell High, Buy Low- run the risk of losing some short-term returns
  • Stay away from headlines- do not try to predict the market!
  • Have a financial advisor if possible- try free consultations from several different firms

Just about anyone can invest. It is essential that you continue to go through with your short-term goals in order to complete the bigger picture. Whether that means an early retirement, nice vacations, or money to pass onto your children, long-term investment can get you there. The sooner you commit, the more exponential growth you will experience, and the sooner you can achieve what you would like to! In everyday investment, do not get lost into the lust of money, but rather be involved in the process that can help you gain these assets and new skills. This way, engaging in the process, will attain higher returns and values, take up less of your time and energy, along with fulfill your portfolio potential.

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