5 Steps to Help You Manage Your Investments

by Kristen Jonnes on Tuesday 10 September 2013, 4:20 PM | Category: Financial Management| View: 2250 views
 
 
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 If you feel ready to start investing your own money and managing your own portfolio then you are not alone. Many individuals are taking their financial future into their own hands. Investing is a great way of helping you to build a great nest egg to use in your retirement or to leave to your children. By making the right investments you could even retire sooner than you thought was possible.

As with any type of financial investment there are risks. However, the more you learn and the better systems you have in place will help you to minimise the risks and have a more successful portfolio.  Here are some steps that can help you to start off on the right foot.

The Investor Profile

By determining your profile you well be able to decide how much tolerance you have for risk. Your set tolerance will play a big factor in the type of investments you decide to use. You well need to answer three basic questions which are:

  • How much do you know about making investments?
  • How much risk are you comfortable with?
  • What are your goals for your investments?

You also need to establish how far into the future you are looking. It is a good idea to start off with at least a five year horizon. You can always increase this as time goes on and you get more comfortable with your investments.

Your Analysis Method

Look at how you would like to manage your investment analytics. You will want to consider:

  • Technical analysis which is when you look at the history of the prices to establish future trends. This is an option that is often used by those with experience.
  • Fundamental analysis is when you look at the bigger picture and take into account the balance sheet, human resources policies as well as the competition of the companies.
  • Using the quantities method takes economic variables to try and establish trends.

Your Investment Policy

There are four principles which are:

  • Diversification - spreads your funds across many different investments
  • Asset allocation -  this allows you to take your personal needs into consideration depending on when you want to be able to use the money
  • Entry and exit prices - Decide what amount you want to pay for securities and what price you would like to sell them for
  • Emotional attachment  -  this is the least effective method as these are the ones you are fond of that you might continue to invest in even If they are not hitting the right targets

Monitor the Portfolio

You will need to keep a close eye on your portfolio. Keep a very close eye on the stock markets and the state of the economy, inflation rates and interest rates. Do not forget you well also need to be aware of unemployment rates and the exchange rates too.

You should use investment management companies and tools that will help you to monitor what is happening with your stocks and shares in real time. At the same time you should always be working to improve your knowledge so you are able to make more confident decisions.

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