In the process of building an investment portfolio, you need to understand that it is quite difficult to control all the factors. Therefore, the main goal of the overall development strategy is to provide the investor with a good financial result with minimal risks.
Principles of a good investment portfolio
There are two principles of construction:
- Use exclusively liquid assets. This approach will allow, if necessary, to sell part of the investment in a few days. In this case, you will have to exclude precious stones, rare coins and antique vehicles. It is also unacceptable to use working instruments such as options and futures here. When investing gold in your portfolio, you must remember that it gives results only during a crisis, when the price of securities decreases.
- Do not invest in assets that you are new to. It is recommended that you only use assets that you specialize in well. Adhering to such a simple principle, you can achieve high results in the end.
- In the short term, any investment portfolio will raise certain doubts about the correctness of its creation. Over time, there will be a desire to change your strategic decisions, and make changes in the form of more shares or cash.
Increased profitability and reduced risk.
By complicating the composition of the portfolio, you can significantly reduce risks and increase the level of income. Replacing long-term bonds with short-term bonds can also protect your portfolio.
Using overseas stocks can reduce risk through diversification and increase profits. In order to increase income and improve diversification, it is allowed to use shares of large companies in conjunction with shares of smaller companies.
When choosing one or another option, it is recommended to clearly define the level of profit increase and risk reduction.
