How Can You Improve Your Investment Portfolio?
Investing is not a new phenomenon. It has existed for centuries and has only evolved in form. And while it might superficially seem as though investing is all about luck, there is a lot of strategy and skill involved with the process. In this article, we discuss some simple techniques that may help you improve your investment plan. [B-01] 1. Lower your investment fee It is easy to disregard the investment fee when one first starts investing. However, the investment fee can have a noticeable impact on your returns. For instance, let us consider that you manage to reduce your investment fee by 2% on a 500,000 rupee investment. You will be getting a return of 10,000 rupees extra every year. Over 20 years, this can amount to 200,000 rupees! 2. Diversify, diversify, diversify This is the easiest guideline in the rule book. But one that we often end up forgetting. In general, you should not put your eggs in one basket when investing. It can be easy to get carried away during a bull market. However, bull markets never last forever. Remember to place your investments in a variety of assets i.e. stocks, bonds, mutual funds, etc. 3. Level up your knowledge If you have access to more knowledge and resources, make sure you seize the opportunity. Any investor can benefit from a quality course in investing. This might include an online seminar or a course in a college or university. If you don’t have access to such resources, see if you can get your hands on a book on investing that you can read during your spare time. 4. Do not rely on experts This might seem counterintuitive. However, if you want your investment plan to flourish, it is important to know when to tune out unnecessary information. Most experts do not know what they are talking about. It is always better to trust your intuition when investing, and have a focus that is dictated by your interests. If there is an expert you trust, see if you can get in touch with them to check on their credibility. 5. Have a long-term plan While investing can have short-term benefits, it is largely a long-term practice. If you haven’t already, relook at your investment plan and ascertain where you would like to be in 20 years. Or even 5 years. Once you have determined your goal, it becomes easier to determine the amount of risk you are comfortable taking. And since this might change over time, you should constantly revisit your original investment plan and modify it as and when necessary. 6. Don’t stop investing It can be easy to get bogged down by bear markets. As mentioned in the previous point, investment is a long-term endeavour. Simply because your plan is not doing very well at the moment does not mean it will not be successful in the long run. Most investment plans have substantial long-term yields. Don’t pull out of the game because you have had a bad day, week, month, or even year. Stay committed and see your original plan through! 7. Recognize your investment type No two investors are the same in outlook. Every investor has preferences that would be different from that of another investor. For instance, while a certain investor might be drawn to riskier assets in their portfolio, another might be a lot more risk-averse. It is important to recognize what type of investor recognizes your tendencies and habits. If you are generally drawn to more risk, you might choose to be more careful next time the market is not doing too well. Similarly, if you are risk averse, you might want to consider expanding the size of your investment plan beyond your comfort zone during a bull market. 8. Learn from your successes and failures Investment plans do not attain fruition overnight. They require persistence and dedication. It is important to find ways to reflect on your decisions and learn from them. You could do this by sharing your investments with friends and family members that you trust. Or, if you are anything like me, you might choose to maintain a journal where to jot down what you have learned. The idea is not to get carried away by your successes, and to not make the same mistakes twice. It is highly unlikely that your investment plan will go exactly the way you intend it to. The best you can do is constantly re-evaluate and adapt. 8. Keep regular track of your investments Especially if you have a broker, it can be easy to disengage from your investments and not check on how they are doing. The important thing to remember is that your investment plan is ultimately yours. While the broker might be able to make certain choices for you, they cannot be the best judge of your preferences and aims. Set up a time every week, or month, that you dedicate towards re-evaluating your investment plan. Even ten to fifteen minutes every week, where you simply go through your portfolio’s performance, can go a long way in making informed choices. [B-02] Conclusion This article discusses various strategies that can be useful in improving the quality of your investment plan. While each strategy has its own merits, it is important to be selective when approaching your plan. Do not plan to implement all that is mentioned in a single day. Prioritizing what strategies work for you is important. Over time, you may be able to employ all of the strategies in a manner that is helpful and sustainable for your investment plan. It is also important to continue researching by reading other blogs. The Piramal website provides various articles that might directly or indirectly inform your investment choices. Be sure to browse through the website and find the information that will make your investment dreams come true!