The Smart Investor
    Facebook Instagram
    Monday, January 30
    Facebook Instagram LinkedIn
    The Smart Investor
    • Home
    • About
      • About Us
      • Careers
    • Smart Investing
      • Getting Started
      • Investing Strategy
      • Smart Analysis
      • Smart Reads
    • Special Free Reports!
    • As Featured on BT
    • Our Services
      • Our Services
      • Subscribe now!
    • Login
    • Cart
    The Smart Investor
    Home»Getting Started»3 Portfolio Management Strategies To Lift Your Wealth
    Getting Started

    3 Portfolio Management Strategies To Lift Your Wealth

    Jeremy ChiaBy Jeremy ChiaNovember 15, 2019Updated:July 8, 20203 Mins Read
    Facebook Twitter LinkedIn Email WhatsApp
    Share
    Facebook Twitter LinkedIn Email WhatsApp

    Portfolio management is an important skill in investing.

    Take on too much risk and you may be left with sizeable losses. Take on too little risk and your returns will be mediocre.

    So how do we balance risk and returns?

    Given the uncertainty surrounding the market today, I thought it would be an opportune time to share some portfolio management tips that I believe investors can adopt.

    Mind the size

    Whatever you invest in, it is important to invest an amount that you are comfortable with.

    Of course, this can vary depending on the size of your portfolio, your investment strategy, investment horizon, and even your risk appetite.

    For stock investors, I encourage you to invest no more than 5% of your entire portfolio capital in a single stock. This reduces the risk that a sudden drop in price in the stock will have a detrimental impact on your returns.

    It is not uncommon to find stocks fall more than 30% and never recover. Sometimes it may not be the fault of the investor. Unforeseen circumstances can cause a sudden and irrecoverable disruption to a company’s previously sound business.

    We can avoid potentially painful losses when we sufficiently diversify our investments.

    Manage the risk

    Adding to the first point, it is important to assess the risk-reward profile of a particular investment.

    For an investment such as a high-growth stock that has a high-risk but high-return possibility, it may be wise to size down your investment to reduce the chance that a permanent fall in the price of the stock will cause a large loss to your portfolio.

    Keep cash in hand

    Although not all portfolio managers may agree, I prefer to keep some cash in hand. The cash will come in handy when a bargain suddenly appears in the market.

    To ensure that I have the means to take advantage of an investment opportunity, I hold 5% of my total investment capital as cash.

    There are, however, exceptions to this rule. If stocks have seen a market-wide decline, presenting plenty of investment opportunities, it may be wise to be fully invested to make the most of these bargains.

    Get Smart: Portfolio Management Simplified

    Obviously there is no one-size-fits-all strategy to invest well. Investors need some investing experience to personalise their own portfolio management according to their goals and needs.

    However, these three strategies can act as a framework for how to manage an investment portfolio.

    If you’d like to learn more investing concepts, and how to apply them to your investing needs, sign up for our free investing education newsletter, Get Smart! Click HERE to sign up now.

    None of the information in this article can be constituted as financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. 

    Note: An earlier version of this article was published at The Good Investors, a personal blog run by our friends.

    Share. Facebook Twitter LinkedIn Email WhatsApp

    Related Posts

    retire in singapore

    How Much Money Do I Need to Retire in Singapore?

    January 18, 2023

    Top 5 US-listed ETFs You Should Know

    January 16, 2023
    Hong Kong stock exchange (HKSE)

    5 Popular ETFs on The Hong Kong Stock Exchange

    December 28, 2022
    Facebook Instagram LinkedIn Telegram
    • Careers
    • Disclaimer & Privacy Policy
    • Subscription Terms of Service
    © 2023 The Smart Investor. All Rights Reserved. The Smart Investor, thesmartinvestor.com.sg, an investment education website managed by The Investing Hustle Pte Ltd (Company Reg No. 201933459Z) is not licensed or otherwise regulated by the Monetary Authority of Singapore, and in particular, is not licensed or regulated to carry on business in providing any financial advisory service. Accordingly, any information provided on this site is meant purely for informational and investor educational purposes and should not be relied upon as financial advice. No information is presented with the intention to induce any reader to buy, sell, or hold a particular investment product or class of investment products. Rather, the information is presented for the purpose and intentions of educating readers on matters relating to financial literacy and investor education. Accordingly, any statement of opinion on this site is wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader. The Smart Investor does not recommend any particular course of action in relation to any investment product or class of investment products. Readers are encouraged to exercise their own judgment and have regard to their own personal needs and circumstances before making any investment decision, and not rely on any statement of opinion that may be found on this site.

    Type above and press Enter to search. Press Esc to cancel.