Our tagline says: A Better Portfolio For A Better Life
What is a Portfolio? How to make it better? And finally, How to make a Profitable Portfolio?
These are the basic and most emotional questions investors like you and me ask everyday. Let us try to break them down and answer these questions carefully.
A very simple, 3 steps to building a profitable portfolio will be presented to you today. Take a look on it and maybe you will find this applicable to your own investment plan and strategy.
What is a Portfolio?
A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, as well as their funds counterparts, including mutual, exchange-traded and closed funds. Portfolios are held directly by investors and/or managed by financial professionals. Prudence suggests that investors should construct an investment portfolio in accordance with risk tolerance and investing objectives.
Meaning, once you open an account from a stock broker like COL Financial and bought your first stock, you are already managing a portfolio.
How to make it better?
You can make your portfolio better by carefully studying your actions. Also by carefully studying your personal desires, your future plans and most of all your current financial situation. Many didn’t notice that your portfolio reflects your personality. The stocks you are holding identifies your personal interests and wants. Because your portfolio is the product of all your actions.
- You want to buy your first stock. I believe before even arriving at this point, you already have an idea what stocks you want to buy. But, you need an approval and a Thumbs up or a pat on the back from someone who will guarantee you that the stock is good for you.
- You want to add a new stock. Similar to the first scenario, you need an approval, you want somebody to tell you, go on! Buy that stock because it is good.
- You are not happy with the stocks you have. This scenario is a little bit difficult. Many friends I thought how to invest became trap on this scenario. Why? Because, they are experimenting. They are buying stocks out of the recommendations. The result is awful. Their portfolio is all loss and mostly they lost hope. We don’t want this to happen to you. Please be careful and stay with our recommendations on the Stock Pick list.
In other words, to make a better portfolio requires a constant attention. Look at your portfolio once in a while. How often, once a day is a good habit.
How to make a Profitable Portfolio?
This is the heart of this entire article! So, lets go straight to the point. To make a profitable portfolio, do any or all of the following:
Step 1: Diversify your Portfolio
This is not very applicable to newbie investors because you only have a few stocks in your portfolio. For those who have at least 100,000.00 or 200,000.00 Thousand pesos in their portfolio, this is for you. To diversify your portfolio, simply assign a number of percentage on each stocks on your portfolio. For example, you have 10 stocks with stock 1 is 20%, stock 2 is 20%, stock 3 is 20%, stock 4 is 20%, stock 5 is 20%, stock 6 is 20% then stock 7 is 10%, stock 8 is 10%, stock 9 is 10% and stock 10 is also 10%. Meaning, the money invested on stocks 1-6 is bigger than the money invested in stocks 7-10. The reason is to minimize the risk of loss.
Step 2: Do Cost Averaging on your Portfolio
It simply means, whether the stock prices are down or up, buy regularly. Regularly means, at least once a month. Because our aim is to lower our Average Price and hold more shares of the stocks. This is very important that if you do it regularly, you will see and appreciate the effect in the long run.
Step 3: Always keep money on your Buying Power
Cash is King! As an investor always put that in your mind. And I will repeat, Cash is King! The stock market is very unpredictable. Today, you see it green the following day, you see it red. Nobody knows what will happen tomorrow. But, one thing is for sure, it is always going up in the long run.
So, that’s it! The 3 Steps To Building A Profitable Portfolio! They are very easy to follow but needs a lot of patience and discipline.
I wish you all the best in your stock market investment.
As always, keep on learning and earning soon.
Here are some screenshots of stock market investors.
Note: Portfolio owners post this on financial facebook groups as public. If you know any of the owner and wish to remove this screenshot here, message me using our contact form, thank you.