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Since 2013, crowdfunding and other advances have made investment more accessible than ever. More people are able to add to their incomes or save for retirement by building a better portfolio.
You may be wondering how you can get started with investing. Before you dip your toes in the water, check out these five investment management tips! They’ll help you get started on the right foot so you can make even bigger returns.
1. Set Goals for Investing
Before you start investing, it’s important to outline some clear goals. What do you want to achieve with your portfolio?
For some people, investment is a way to build their retirement savings. For others, it will become a supplement to their income. Still, others will use their investments to start a business, fund a vacation, or even buy a house.
If you have short-term goals, then you’ll want to manage your portfolio differently than if you have a longer-term outlook.
Good goals also need to take market conditions into account. You may want to make $200,000 in a year so you can buy a house, but that likely isn’t realistic. It definitely isn’t realistic if the economy enters a bear market.
You may want to talk to professionals about investment analysis and portfolio management. You may ask them to help you draw up a plan or to review a plan you’ve created.
If you already have some investments, then spend some time reviewing it and the management of it. This will help you assess how well this strategy is meeting your goals.
2. Get the Right Tools for Investment Management
Your next move will be finding the right tools to help you manage your investments. For some people, this may mean hiring someone to manage their investments for them. You may not feel you have the time or understanding to handle manage the right way.
Be aware that commissions on portfolio management can be quite high, though. That’s why so many people have turned to alternatives that let them manage their own investments.
Investment management software could be one of the tools you use to manage your portfolio. You might want to use a particular app. There are some that are designed for beginners, and they make the process simple.
Others provide more complex platforms, which are better for advanced users. You can even opt to automate your portfolio management by working with an AI-powered platform.
3. Diversify Your Portfolio
If you’ve ever worked with an investment management group, you might know some of the most common advice is to diversify your portfolio.
There’s a reason everyone gives out this advice. It’s a great idea. Diversifying your portfolio helps limit losses if one type of investment takes a hit.
Most people will suggest investing in a few different financial products:
- Real estate
- Index funds and exchange-traded funds (ETFs)
- Mutual funds
- 401(k) or other employer-sponsored plans
The instruments you choose may also depend a bit on your goals. Pension plans are great for retirement savings. Mutual funds tend to be slow growing.
Index funds and ETFs are often good for beginners. Bonds represent a safe investment, although the return on them is usually modest.
You may want to choose one or two instruments to get started. Over time, as you have more money, you can diversify the portfolio more.
4. Read up on Investing Strategies
The key to successful investing is usually having the right strategy. If you want to grow your money quickly, then a different strategy is order than if you’re investing long term.
You should read up on different investing strategies. You might want to try the cookie jar approach, which can help you get the funds you need. Add just $10 a week to your investments to keep them growing.
Snowballing funds also works. This means you take the dividends from your investments and reinvest them. You might put them back into the same fund, or you may use them to help diversify your portfolio more.
You might want to read advice from the professionals. An example might be reading up on the Goldman Sachs principles. You can learn about how the investment managers at Goldman Sachs guide their portfolios.
There are plenty of other guides and manuals out there as well. Some of them may be helpful if your goal isn’t maximum growth.
5. Review Your Portfolio Regularly
Whether you use alternative investment management or work with an advisor, you should always review your portfolio.
You need to review your portfolio for more than just performance, though. You’ll also want to make sure you have your money invested in the right things.
This impacts growth, but it also speaks to your goals for the portfolio. If an investment isn’t performing for you, it could be because it’s the wrong instrument for your strategy.
It’s also possible for your goals to evolve and change over time. If your goal was to earn quickly to buy a house, you might change your investment outlook once you’ve bought the house. You might change your goal to focus on college savings for your kids or funding retirement.
Reviewing your portfolio gives you the opportunity to make changes. That way, you can make sure your portfolio is always in line with your financial goals.
Build a Better Financial Future
Investment management can seem daunting at first, but it doesn’t have to be. There are so many tools and options out there, as well as plenty of solid advice.
Knowing where to start is often the biggest hurdle. With these five tips in hand, you’ll be in a better position to get started and invest the right way.
Looking for more tips about managing your financial future? Check out our extensive archive. We have plenty of great advice, as well as how-to guides and the latest tips to keep your portfolio growing.