Home > Blog > Money and Finance
Why It's Very Important to Have A Investment Portfolio
Investing is not a game. Not for the weak hearted. Stock markets move up and down. One cannot just predict the market. Not possible to predict its movement. Hence cannot time it's up and down. One can build a solid portfolio so as to possibly succeed. Few considerations to keep in mind.
Invest with a goal in mind - As discussed in one of the point, the purpose of investing should be kept in mind. Even before starting with the investment. One should know what it will cost to achieve that purpose. Purpose shows the path to investment. Always correcting it when invest is going off the path. Yogi Berra, a wise baseball philosopher sums up "If you don't know where you're going, you'll miss it every time."
Your present situation and risk you can take - What is the financial position today? How much one has earned and how much one has saved till date. In future date what will be the need. How much earning should be there so as to save enough amount to fulfill the required goal.
If the savings is insufficient then that saving should be channelized for investment. Then the amount will increase in the shorter period. When investment comes into picture the topic of risk arises.
All investment carries risk. The level may vary from type of investment. One extreme is high-risk takers and another extreme is risk-averse. This depends upon nature of the individual and the circumstances.
With risk comes the reward. High risk, high rewards. Low risk, low rewards. Usually, individuals take the middle path. Medium risk and medium rewards. One can take help of the best share tip provider to ease the situation.
Purpose - There should a definite purpose or goal for investment. It should personal one like a holiday abroad or buying a home or marriage or education or retirement or anything. Once the purpose or goal is set, next is setting the time to achieve it. It can be a week or month or a year or a decade.
Example, going for a holiday trip to Europe next summer. Here the purpose is holiday trip. Time duration is 2 years. What you want to do and when. Get nifty future tips, two-day free trial.
Quality, not quantity - For the long term, it is the quality which lasts, not quantity. Whatever be the components of your portfolio, see that it maintains quality. Because one's holdings are critically important.
Diversified investment - The portfolio should not be put up in a haphazard manner. It should be put up with proper planning. It should be put up after considering the fundamental and technical's of the securities.
The portfolio should be diverse across sectors (IT, banks), caps (small, mid, large) industries (cement, mining, pharma), bonds, fixed deposit, provident funds, precious metals and stones (gold, diamond), MFs, real estate, geographical regions, commodities tips etc.
Here risk tolerance of the investor should also be taken into account. Certain investments are risky in short terms but are not risky in long term. There are many share market advisory company who can calculate the risk associated.
In shares, one should look for cash flow, product, profits, dividend history, management, place of among peers, etc of the company.
Current market shares may be expensive or cheap, which depends upon present political environment, demand and supply, etc. Buy only quality 'A' listed shares.
Mudassir Hasan is a financial enthusiast and likes to share his knowledge on Indian financial market. He also provides commodity tips, share market tips and nifty tips.