If you want to set yourself up financially for the future and retire comfortably, it is vital that you strengthen your investment portfolio so that it is working to its fullest potential.
So what are the best ways to strengthen your investment portfolio?
The simplest way is to employ the services of a reputable financial adviser.
A financial adviser will help you to plan for any short-term and long-term goals you may have, including further education and/or retirement. They will recommend investments to match your goals and help you to invest your money based on your personal comfort levels and risk appetite.
As time-poor professionals, we do not have the ability to successfully build, manage, and balance our own investment portfolio, which is why outsourcing certain tasks is often the best strategy we can employ.
Regardless of whether you decide to utilise the services of a financial adviser or choose to do some of the heavy lifting yourself, there are some important steps to take when building a strong investment portfolio.
Step 1: Know yourself
Before you can determine the appropriate asset allocation, it is important to identify the exact goals you are hoping to achieve and what your ongoing appetite for risk is.
For your investment portfolio to be successful, it needs to align with your needs and goals. For most of us, at this point in our life, our biggest goal is more than likely retiring comfortably. To achieve that goal, we need to select the right investments. And the amount of time we have until we retire will ultimately help determine which investments and asset classes we select.
In addition to goals and time, another factor that will help determine your appropriate asset allocation is risk tolerance. If you don’t mind taking a chance, you may want to take greater risks with your investments in the quest for greater returns. But while we would all like to reap high returns year after year, if you are the type of person who will have trouble sleeping when your investments dip, then a high-risk strategy is probably not the right one for you.
Knowing who you are, what your risk tolerance is, and what goals you want to achieve will help you to successfully determine how your investments should be allocated among the different asset classes. The key is to get the right mix of income and growth assets for your unique set of circumstances.
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