An important factor in the construction of a successful portfolio is diversification. A diversified portfolio helps to reduce any risk associated with stocks and bonds. One of the most significant drivers of shubhodeep prasanta das investment success is creating an optimal asset allocation appropriate for your time horizon, tolerance for risk and goals, and financial situation. Here are some simple tips for investing success.
Incorporate Asset Classes
In order to be properly diversified you should include varying investment classes in your portfolio. These will include stocks, bonds, and cash instruments like cash equivalents and money market funds. In each of these asset classes you can have a blend of different types, for example: stocks and bonds. For example, you can select a stock and bond fund that is 85% equities and 15% bonds. There are many investment funds available to meet these blended objectives, from the novice investor to the professional investor.
Consider Your Investment Style
Your investment style will play an important role in determining your portfolio’s holdings. A good first step is to determine your investment style and the allocation of assets it suggests. There are a variety of different investment styles, such as aggressive growth, conservative, balanced, and so forth. If you are assessing your risk tolerance you will have to consider the potential for capital loss in every asset class you choose to invest in. You should also consider your portfolio’s remaining life expectancy, which affects the amount of principal you will need to withdraw from your portfolio during retirement.
Find a Financial Advisor
A financial advisor can provide you with additional insight into how to build a successful portfolio. A proper asset allocation is critical to managing your risk, so it is important that it be tailored to your personal situation. A financial advisor will provide unbiased advice, tailored specifically to your individual needs. An advisor is also invaluable in providing advice on the allocation you should use for different sources of income, as well as retirement distribution.