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Financial Portfolio Management 101: A Guide for New Investors

Do you know how much money you have in stocks right now? Have you been thinking of making your first stock investment? 

Whether you’re about to get into the stock market or you’ve been doing it for years already, it’s worth taking on your own financial portfolio management.

There’s no need to pay someone thousands of money to watch the market and help you make decisions. You’re perfectly capable of creating your own investment success, and you can save a lot of money by taking matters into your own hands. 

Below is a list of everything you need to do to manage your own portfolio.

1. Research Everything

Here’s a little secret: the best financial advisors aren’t the people who know everything, they’re the people who do the most research before counseling a client.

Doing research is how you win in stocks. It’s the only constant you have on your side in such a fast-paced market. No matter how much a stock rises/falls, all you have to do is a bit of digging to find out why.

Make it a point to keep up with a daily market report. Consider how current events and a company’s reputation will affect big stocks. Think of the history of a stock’s success, too.

When you learn how to start putting together different pieces of information, you’re onto something. This will help you better predict trends and make smart buying/selling decisions. Although, you can never be 100% certain of what will happen with stocks, preparing for the most probable situations is your best bet.

2. Diversify Your Portfolio

Another smart move to make when managing your portfolio is to diversify. You don’t want to put all of your money in one industry, or worse, one company. You want to spread out your assets a bit instead. 

This way, if something happens to affect oil stocks you can still count on your real estate or small startup stocks to support your earnings. It’s rare for a lot of markets to be hit with downward trends at once. But, it only takes one big shift to ruin your portfolio if you have a bunch of similar stocks. 

3. Minimize Your Costs 

If your investment portfolio has more than just stocks, this is a tip you can’t afford to underestimate. Take a look at all the assets you’re spending money on and consider the value you’re really getting out of them.

More importantly, add up all the expenses you’ve incurred to keep your assets in good condition. It may be worth selling some things or at least cutting back on additional services in order to get the most out of your investments.

4. Always Account for Taxes

Taxes are one of the sneakiest additional expenses associated with investments. You have to pay them on all of your tangible assets (real estate, cars, company equipment) and on stocks, too.

It’s best to pay these taxes quarterly rather than letting them add up over the year. This allows you to better gauge how much money you’re profiting and how much you owe, too.

5. Add to Your Investments on a Regular Basis

Sometimes, the best way to make your financial portfolio more valuable isn’t to add more investments. Rather, it’s to put more money into the investments you already have!

If one of your stocks is doing well, it’s probably in your best interest to buy more. If you see a growing need for real estate in your area, add to the number of properties you have in your name and create an aggressive sales strategy. 

These are just two of the smart money moves available to you when things are on the up. Keep in mind that investments won’t perform well forever. But, you do have to take advantage of them when they’re hot.

6. Try Averaging Up

Averaging up is the financially-savvy term for buying more of a certain stock. However, there’s a science to this that’s good to keep in mind.

Your initial investment should be the highest one-time investment you make in a stock. From there, you can start to add a little more and more until you reach the value in shares you’d like to have. This should be done gradually over time, and the total amount of investment should be kept below the pivot point. 

Such a strategy allows you to generate more success when good performance is likely. It keeps you from losing too much in the event a stock takes a serious hit.

7. Learn to Recognize Sell Signals

If a stock is dropping rapidly, you may want to consider selling. This isn’t true for all stocks, considering many of them rise and fall on a regular basis. 

But, one thing you can count on to stay the same is the importance of selling investments. It’s not worth putting so much money into your portfolio if you’re not getting anything out of it!

Whether you’re all about stocks or you have a mix of shares and tangible assets, you need to sell some things from time to time. This will give you the fiscal returns you’re looking for. It ensures you make the earnings you want without remaining dependant on your assets to keep the value they currently have.

Financial Portfolio Management Made Simple

At the end of the day, financial portfolio management is a lot easier than most people make it out to be. It doesn’t have to be complicated or intimidating. All you have to do is look at the facts in front of you, take your time, and know how to recognize red flags. This applies to all kinds of investments. 

For more tips and tricks to help you make smart financial decisions, click here.