Munif Ali

Munif Ali Logo

How to Manage Your Investment Portfolio in 8 Easy Steps

Share this content :

How to Manage Your Investment Portfolio-min

As 2022 brings in lots of financial challenges, such as inflation and student debt, you might be looking for new ways to get some money. Thanks to the digital revolution, one of the most popular methods of growing financially are investing. What used to be a specialized industry is now accessible on so many platforms. You could do a search on the Google Play Store and find several apps to help you get started on investment and stock trade. Plus, it can help you earn money on the side.

How to overcome procrastination? Here are the 5 signs that you are always in chronic procrastination:That said, you need to start with the right investment portfolio before you can see any growth. By knowing what assets help you out, whether it’s a set of shares or a list of loans, you can quickly see your earnings rise to numbers you could’ve only dreamed of. Here’s how you can manage your investment portfolio in easy, simple, and effective ways!

What is an investment portfolio?

Before you can make an investment portfolio, you need to understand exactly what it is and why it matters. An investment portfolio is basically a list or catalog of all your assets. Think of it like a treasure chest full of options available to make money and grow your earnings.

What makes an investment portfolio unique is that it’s more of a conceptual cabinet. You basically keep track of all assets either digitally or through documents. Typically, the things you’ll find in an average investment portfolio include stocks, bonds, and loans. However, there are many ways that you can build a portfolio that fits your own style. For example, some build their investments as part of other plans, including retirement or mortgage funds. Others can build their portfolios with the help of brokerages or financial consultants.

Another interesting aspect of investment portfolios is that they can be as diverse as you’d like. For example, you could build one focused mainly on shares or stocks, with some additional assets like exchange-traded funds (ETF). However, you could also make one that carries loans, bonds, mutual funds, and Roth IRAs. As long as you understand how much help an asset can give you, the range of an investment portfolio can be as narrow or as wide as you’d like.

What are the benefits of having an investment portfolio?

So far, you can see that an investment portfolio has a lot of potential for whoever uses it. However, you might wonder why anyone would want one. Simply put, if you manage your investment portfolio, you can build a better lifestyle for yourself. Here are some of the benefits you gain by building a portfolio for yourself.

You can track and expand your assets.

First of all, an investment portfolio is like having a bank account. Here, you can see what assets exist in your life and how they contribute to your overall finances. With an investment portfolio, you can keep track of all the assets under your name. For example, you can see how many existing loans to banks, mutual funds, and number of shares you carry.

In addition, an investment portfolio allows you the chance to hold and expand your assets. Anyone can carry a single share or a list of stocks from one company. However, in the right hands, an investment portfolio can carry so many different options and assets. For example, investors have a portfolio that carries multiple stocks from ten or more companies, as well as a list of bonds and mutual funds under their name. Whether you have ten different assets or hundreds, a portfolio helps you keep track of what gains you money over time. It can even help you assess what is costing you money in the long run.

You can start making more money.

In the hands of a competent financial planner, an investment portfolio is like a golden ticket. You can use your portfolio to start making more money than you ever imagined, especially if you examine what assets are available.

For instance, you can dedicate a portion of your portfolio to focus on insurance, like pet or life insurance plans. At the same time, you could include a portion for stock indexes, which are a set of shares from different companies, instead of just one.

Another reason why you’ll want to manage your investment portfolio is that it can be used as a steady means of income and funding. Some people dedicate their investment portfolios to provide for their families, while others use them to earn more cash to cover existing debts or loans.

You can enjoy either an active or passive source of income.

Lastly, people often go for an investment portfolio because it’s a flexible method of earning money. You can use it as an active source of income, which means you spend the day growing and streamlining your assets. Investing in a good portfolio can help you trade, share, and sell your assets to make a lot of money and provide for yourself and your family.

However, not everyone can be an active investor. There are people who still see investing as a side hustle, a secondary means of making money. They might not enjoy the task of spending most of their day tracking the rise and fall of shares or assets. Plus, not everyone has the budget to pay for multiple assets at the same time

Thankfully, you don’t need to manage your investment portfolio 24/7. You can also use it as a passive, secondary source of income. You don’t need to quit your day job to keep your assets in check. Instead, you can simply carry a portfolio of your investments that you can check on time. This way, you can still work a regular 9-5 job while earning money through your stocks and bonds. 

How do I manage an investment portfolio?

Now that you see just how useful an investment portfolio is, you’re probably looking to start one for yourself. Well, before you jump out to make your catalog of assets grow, you need to know how to manage it first. Under the right vision, your investment portfolio will become a trusted and valuable part of your financial life. To make that dream into reality, here are eight simple steps you need to take to manage your investment portfolio.

1. Choose what assets and shares you plan to focus on.

The first step to making an investment portfolio is to have a plan. You must consider what assets you want to invest in. Knowing which ones you can maintain, or simply thinking of which ones you want to experiment with, is better than randomly building one. Building one from scratch will be much easier if you know what assets you currently own or are looking to get into. For example, you might start to build a portfolio based on what shares you’ve bought and what bonds or mutual funds you’ve agreed to.

If it sounds too hard to make one from scratch, you can always enlist the help of a financial consultant or analyst. They can guide you on what assets are doing well today and which ones may potentially benefit you in the future. More importantly, these consultants work with you to make a portfolio that fits your style. In other words, you can make a safe, low-risk portfolio to ensure a steady stream of money. You could also make a high-risk portfolio that can ideally get you many rewards, even if it might cost a lot to maintain.

2. Evaluate an ideal timeline.

A good investment portfolio needs more than a plan of what assets to carry. It should also have a timeline of the money you plan to gain in the future. In other words, you need to set a timeline for how soon you want your returns.

For instance, some investment portfolios are flexible and can take years before the payoff occurs. The money they earn might come slowly due to a careful, low-risk approach. This can help those looking for long-term profits and don’t mind waiting a while to see their money grow to the numbers they want. Examples of investments under here include insurance plans and mortgage repayments with 10-year or 20-year contracts.

Other portfolios might be more aggressive and high-risk. They can cost a lot of money to build, but they also allow a lot more profit in trade and returns. This kind of portfolio might include more sales and trades for your shares and stocks. Examples of this include stock indexes and cryptocurrencies, all of which are subject to the highs and lows of the market.

3. Know who to ask for help or advice.

Once you feel ready to manage your investment portfolio, that’s the time you should consider who to reach out to. There are many types of investors and financial advisors around the world. You can find one in your local bank or on online platforms like eToro and Invstr.

To make it easier, always make sure that the person you ask has the same approach or style as you do. One reason why is that it helps you understand what parts of your plan need work or improvement. For example, if you’re a low-risk type of investor, a good financial advisor can help you spot when to take a chance and when to hold back.

Aside from investors and advisors, take time to speak to close friends and family members. They can help you build a network of consultants to double-check, or even triple-check, your investment options. Plus, a trusted relative or companion can understand your personality better than standard professionals, which can make the advice more meaningful and appropriate for your mindset.

4. Think about your risk tolerance.

So far, you’ve seen that risk is a big factor in all investment portfolios. The reason why is that every person has a different type of risk tolerance. It’s how much money a person is willing to risk and potentially lose if things don’t work out.

Risk tolerance is important because it can tell you how investments can affect your life. For example, a young investor who maintains a stable job might be more open to buying stocks or bonds at the start, even if it means losing money. However, the same can’t be said for someone who just got married or who already has children. The wrong investment could easily put their family in danger, especially if it costs a hefty sum.

In general, the rule of thumb is that you can take more risks if you’re younger and have fewer obligations. You don’t need to worry about others yet, especially if you aren’t in a relationship or carrying debts. However, regardless of age, always be aware of how much money you’re willing to risk. Playing it safe can always lead to income, even if it is slow; at the same time, spending a lot more money can yield big wins, though that’s only if you’re willing to pay the price.

5. Build emergency savings for the worst-case scenarios.

Once you know what portfolio to make, and how far you’re going to take it, always remember to consider the potential nightmare of losing your investment. Sometimes, even with the most effective plan, the investment won’t work out in your favor. After all, the stock market is volatile and, with the rise of inflation, there’s no telling how costly things can be in the future.

The best way to keep yourself protected from any expensive backlash is by preparing an emergency fund. Having a backup budget can always help you stay safe as you learn to manage your investment portfolio. For example, if you buy a set of shares of a company that eventually folds, you might lose quite a few dollars in the process. With an emergency fund, you can recover from those losses and prevent your finances from taking a big hit.

6. Try the dollar-cost averaging method.

In addition to preparing an emergency fund, you could also try the dollar-cost averaging method. To avoid losing all your money at once, this method focuses on adding a set amount of cash at a consistent rate. For example, you could add $50 to your investments every single month.

By doing this method, you reduce the amount of difference that a one-time purchase could make. For example, if you consistently contribute enough money over two years to buy a set of shares, you’d be risking a lot less money than if you tried to buy the shares in one day. Plus, with the ever-changing nature of the economy, you can avoid losing a lot of money in buying shares or plans during their off-peak seasons.

7. Review and re-assess your portfolio as often as possible.

No matter how many investments you make, it’s always important to review your portfolio whenever possible. Whether you handle stocks or mortgages, there’s always a chance that prices change. Look at this year alone and you’ll find that inflation has affected a lot of prices for food, water, gas, and other amenities.

By reviewing your portfolio regularly, you can keep track of which investments need more attention. Plus, it can also help you find the options that might become too expensive for your tastes. To make it easier, always evaluate how much an asset is to your overall portfolio.

For example, does your current crop of company shares contribute a lot to your overall earnings? If so, how much does it give? By following this method, you can rebalance your portfolio to keep your money in check and your assets controlled. So, if your list of shares covers over 30% of your portfolio, but you only wanted 20%, you can make the necessary adjustments to compensate. This might include selling any unnecessary shares or allocating the cash elsewhere.

8. Be patient and cautious with every single step.

Once you have your portfolio set and you keep an eye on it regularly, the last and most important step to remember is to be cautious. Plans can change at any time, and decisions might need to happen when you least expect them. For example, you might discover that a list of shares that are worth twice as much as before.

Whatever change or concern you have, always remember to manage your investment portfolio with a close eye. Review it when you can and check on what needs improvement. Think carefully about each decision you make. Whether you plan to add a new asset to your portfolio or to sell something for a price, look at how it could benefit or damage your finances.

Also, always remember that there’s no such thing as a perfect portfolio. If you make mistakes, don’t be so quick to lose hope. As long as you remember what you’ve learned, you can bounce back and get back on track. Plus, if you’re not earning as much or as fast as you hoped, don’t make any hasty decisions to change that. See if this current course of action fits you best and, if it doesn’t, research what you can do to start changing your path.

Don’t wait for conditions to be perfect for getting started. Trust that you have everything that you need to get going on the task. You will discover any additional resources that you need once you get started.

In summary

An investment portfolio is a collection of assets that can help you grow your finances. Under the right plan, it can be a quick path to making money or a slow walk to maintaining a steady cash flow. To make sure the portfolio works, you have to know what kind of assets you need and how far you’re willing to spend for it. You also need to consider what risks to take and how often you review them. By following each of these steps, you can learn to manage your investment portfolio properly. This way, it becomes an effective, lucrative, and worthwhile priority in your life.

Did you find this article informative? You can help others by sharing this post with your family and friends. Also, please download my FREE book here, where I will share with you the most effective ways to become a millennial millionaire!

Article Sources
  1. Benson, A., & Jackson, A. (2022, August 17). Investment Portfolio: What It Is and How to Build a Good One. NerdWallet. 
  2. Chen, J. (2020, March 18). Portfolio Investment: Definition and Asset Classes. Investopedia. 
  3. Daisyme, P. (2022, January 17). How to Start an Investment Portfolio (and Why You Should). Due.
  4. Davis, M. (2022, August 31). Portfolio Management Tips for Young Investors. Investopedia.  
  5. Gallant, C. (2021, October 3). 4 Steps to Building a Profitable Portfolio. Investopedia. 
  6. Portfolio Charts. Accessed on November 17, 2022. How To Manage Your Own Portfolio. 
  7. Silva, D. (2022, August 5). What Is an Investment Portfolio? SmartAsset.  
  8. U.S. Securities and Exchange Commission. Accessed on November 17, 2022. Ten Things to Consider Before You Make Investing Decisions. 
  9. Yochim, D., & Benson, A. (2022, August 17). What Is Portfolio Management? NerdWallet. 

Share this content :

Free Ebook Pop Up