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Protecting Your Portfolio


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Let’s be honest: investing your hard-earned money is not always easy. In fact, there are plenty of reasons why many people feel a complete loss when faced with the overwhelming process of managing their assets. Yet, as long as you do it the right way, you can end up being a wise investor, and one of the most important factors to take into account is your portfolio. Starting with a solid and manageable portfolio can help to set the pace so that the rest of your financial investments stay in check.

Here are some of the basics in terms of establishing and handling your portfolio:

Rate of Returns.

Depending on the scenario, your portfolio’s rate of return can be determined indirectly or directly. There are some crucial factors that you need to determine in order to calculate an accurate and readable rate of return. The first thing is the value of your portfolio from the very beginning; you will then need to measure a period of time (which may vary,) and see the value of your portfolio at the end of that time frame. With the beginning and ending values, it is best to find some values at various periods of time within that time frame. Given these values, a weighted average rate of return can be calculated. Once you have calculated this figure, you can get a better idea of the health of your portfolio.

Determining Diversification.

As the name suggests, diversification in your portfolio means that you have more than one type of asset in your portfolio. These classes of assets could include liquid cash, credit, bonds, or stocks, among other things. Having more than one asset gives you more security as an investor. Think about it: if you invest only in stocks and the stock market ends up taking a nosedive, all of your assets are suddenly down the drain. Yet if you have not only stocks, but cash and credit, then you have a much smaller chance of losing out on all of your money. So, you can see how diversification is extremely important in establishing a firm and secure portfolio.

Getting Extra Guidance.

Of course, portfolio management is not one-size-fits-all, nor is it super simple for everyone. If you feel that you could use some extra guidance or just a one-on-one meeting with a financial expert, then do not be afraid to do so. Especially when your money is involved, there is nothing wrong with bringing in some reinforcements. Just be sure to do your research and find a financial planner or professional who can meet your needs and understand your concerns. Never settle for less, and be sure to communicate clearly in everything you discuss.