7 Tips to Build a Successful Investment Portfolio - Ratinah

Tips to Build a Successful Investment Portfolio - Becoming a successful investor is everyone's dream. In fact, just being an investor looks prestigious because they let their money work for him. So, to be a successful investor, you need skills in managing a profitable investment portfolio.

7 Tips to Build a Successful Investment Portfolio - Ratinah

To form a profitable investment portfolio, you must know how to determine the best asset allocation to meet your individual investment goals and objectives. Not only looking for profitable products but also must be able to meet the need for capital in the future. This will give you peace of mind.

Because basically this investment portfolio contains various types of investment products. So the calculation of profit or loss is taken from the average of each type of product. For example, in your investment portfolio there are 2 types of investment products, namely Mutual Fund A and Mutual Fund B. Mutual Fund A provides a 10% profit and Mutual Fund B has a 5% profit, so in fact, in that investment portfolio, you make a profit of 7.5%. The calculation is (10%+5%) divided by 2 or according to the composition of the capital.

Walking through the financial maze of stocks, bonds and mutual funds can be quite a challenge. American Century Investments offers the following tips to give you the know-how on building a profitable investment portfolio.

1. Know your goals

Consider how much money you'll need for your children's education or your retirement. Whatever your vision for the future might be, set your goals and develop a concrete plan for meeting them.

2. Define your investment time horizon

If you're not planning on retiring anytime soon, you might want to have a portfolio that includes more long-term investments. If retirement is just around the corner, consider a more conservative approach.

3. Determine your risk tolerance

Figure out your risk comfort level and compare that with what you can afford. In general, the longer you have to invest, the bigger risk you can take.

4. Consult a professional

In order to avoid financial pitfalls later on, it is often wise to seek professional guidance when putting together a portfolio.

5. Evaluate Your Portfolio

This investment journey will not run smoothly. It is possible that the research that we have made may be different from the reality so that the results obtained are not optimal. This can happen because there are several things that change over time. For example, state economic conditions, domestic industry conditions, and risks. The changes above are not to be feared but can be used as a strategy for adjusting investment portfolios.

For example, in a certain year the mining industry is in decline, so it is not suitable to collect shares in that sector. Then you can do a sell and switch strategy. This means that you sell shares in the sector and replace it with a more profitable sector.

Another example is suppose that Bank America raises interest rates, then the instrument that has a better yield is the money market instrument. So you can switch some mutual funds to money market mutual funds. This is so that the investment portfolio does not experience a decline that makes you lose even more.

6. Determining Investment Products

The capital you have is then allocated to several investment products. With the previous must pay attention to the purpose of the investment. Suppose you are a person who is willing to take risks, then allocate your money to high-risk products such as stocks and stock mutual funds. Or you can choose stocks with different sectors.

Here's how to determine which assets or products to collect into your portfolio:

  1. Stocks, choose stocks that suit your profile and risk tolerance. To find out the risk of the stock, you can take advantage of the stock screener facility to find the right stock. If you intend to take advantage of the ups and downs of stock prices then you need to do technical analysis. And if you want to make stocks a long-term investment then you need to do fundamental analysis and look for a fair price.
  2. Mutual funds, if you invest in this mutual fund, you won't have to worry about choosing stocks and doing your own analysis. Because this mutual fund will be managed, researched and selected by a deputy investment manager. We only need to assess the performance for the past 1 year, the fees charged to investors, and the amount of funds under management. The higher the managed funds, the higher the liquidity level of the investment manager, and the higher the level of investor confidence.
  3. Bonds or sukuk, if you are interested in choosing bonds, you need to consider the investment rating, type of bond, issuer and coupon maturity.

7. Keep Learning

Apart from having fun doing research and managing portfolios, you also need to learn from experienced people. For example by asking your investment manager, or learning through youtube related to your investment. So that the expected investment portfolio can be realized.

"Recent research shows that investors continue to grapple with some of the most basic investment concepts, suggesting a greater need for financial advice and guidance," said Doug Lockwood, a certified financial planner.

To help investors meet their financial goals, American Century Investments has developed On Plan Investing, a program designed to help investors build and maintain diversified investment portfolios - at no additional cost.

Combining educational tools, advice, market insight and investment products, On Plan Investing helps investors develop a personal investment strategy, whether they are new to investing, seeking guidance but still want control over their investment mix, need help positioning their portfolios with a long-term perspective or need help understanding how the markets work.

That's 7 Tips to Build a Successful Investment Portfolio


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