Do you dream of financial independence? Take a page out of a pro investor's handbook and dive into these strategies.
Managing an investment portfolio is a lot like managing a business. With a disciplined, patient, and proactive approach, you can preserve and protect your wealth while attaining financial independence. Your investment strategies might differ, but you can bear in mind some principles that are consistent at its core, which not only match the markets but your individual characteristics as well.
It’s also important to remember that not all investments in a portfolio may generate returns. It’s a lot like a badminton match – you will lose some points, but to win a game you’ll just have to win more points than you lose. Read the following keys to investing and find out how you might be able to ace those points!
Invest only in assets you understand
In many cases, retail investors take action in the fear of missing out on a “sure-shot” investment opportunity. The key is to avoid any frantic decision. Don’t worry about what you don’t know, worry about being sure about what you do know. If you don’t know how an investment actually works, you can’t know whether you really need it. There are a vast amount of resources online to help you learn. For example, you can learn more about P2P investments on a platform like Funding Societies where we strive to make the concept easy for you to understand and pick up.
It is a prudent approach to create a basket of investments that provide broad exposure within asset classes. It spreads the risk and reward within your investment portfolio. When it comes to investing, the more diversified you are, the better.
We also advise diversification within an asset class or sector. For example, if you invest in P2P lending, you can distribute your investments across as many SMEs and industries as possible in case of a default.
Invest for the long term
We believe that a long-term horizon is a necessary ingredient for investment portfolio success. Investing is a marathon, not a sprint. Don’t get carried away with the ebb and flow of the market, and stay patiently invested. Also keep in mind that past performances are no guarantee of the future, and individual situations may vary.
Re-balance your portfolio regularly
Over time, your investments may fall out of sync with the original asset allocation. You may want to restructure or re-assess your portfolio allocation regularly. Try not to tinker with your investment portfolio at short intervals of time – it’s important to give time to investments.
Disclaimer: The information above is meant purely for informational purposes and should not be relied upon as financial advice. Users may wish to approach a financial advisor before relying on any advice provided by the website to make any decision to buy, sell or hold any investment product.
This article was first published on Funding Societies.
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By Funding Societies
Funding Societies is the leading P2P lending platform for SMEs in Singapore and Southeast Asia. Established in 2015, they have funded up to S$579.54 million to SMEs to date. They are also licensed by the Monetary Authority of Singapore.