Best Investment Tips on Positioning Your Portfolio for next 10 Years

Steps to prepare and position your portfolio for the coming decade

Steps to Position Your Portfolio

It is important to have a long-term expectation from your investment, rather than going with the flow. If you have an expected growth rate in mind, you can carry out your portfolio management accordingly. When you think of the growth of your investment portfolio in the coming decade you have to consider the interest rate trajectory, industry forecasts and emerging patterns for the future. Based on these you can position your portfolio for the coming decade.

Also Read: Retirees must keep these 5 factors in mind if they wish to invest in share market

Portfolio Diversification – When you plan for a decade, the diversification of the overall portfolio is crucial. There will be market ups and downs in ten years, and optimal diversification will insulate your personal finance. This will involve investments across asset classes, including stocks, bonds, gold, real estate etc.

Risk Management – You must be conscious of your risk appetite and review your risk exposure from time to time. Risk appetite decreases with age, so adjust your investment strategies as you grow older. Quite simply, your fixed income investments will increase with age, as you continue to reduce your equity investments and market exposure. 

Research Your Non-equity Investment Choices – Most investors tend to research thoroughly in equities but go for the predictable choices in the other asset classes. However, you can be smart even in fixed-income investments, like choosing structured debt funds that have a higher yield while keeping the risk low. Similarly, instead of an apartment or plot of land, you can invest in real estate investment trusts or REITs that offer liquidity and don’t involve large investments.

Reconsider your Equity Strategy – Your equity investment may undergo ups and downs in a ten-year cycle. There may be negative growth between one year and the next. However, the equity market tends to grow at 12-14% in longer cycles. So, once you select reliable stocks, it is better to ignore market fluctuations and have faith in the long-term growth of the stocks and the market indices.

Alternative Investment Strategies – Apart from all the traditional investments, keep an eye on emerging ones. This includes keeping an eye on the startups and newly listed companies, the unicorns and the soonicorns. You can also explore international markets and lower your Rupee risk by hedging with foreign currency investments. Exposure to international currencies protects you from any depreciation to the domestic currency. Besides, international investments can add stability and diversity to your portfolio.

Also Read: What is compounding? How does it benefit compounding of stocks and mutual funds

With an eye into the future, you can realign your approach towards investing and portfolio management. You will be looking at investment strategies and risks from a long-term perspective, which can reflect in the long-term growth of your investments.

Also Read: Why sectors like renewable energy are best IPO to buy

Source:

https://www.livemint.com/money/personal-finance/how-to-position-your-portfolio-for-the-coming-decade-11668620718527.html

It is important to have a long-term expectation from your investment, rather than going with the flow. If you have an expected growth rate in mind, you can carry out your portfolio management accordingly. When you think of the growth of your investment portfolio in the coming decade you have to consider the interest rate trajectory, industry forecasts and emerging patterns for the future. Based on these you can position your portfolio for the coming decade.

Also Read: Retirees must keep these 5 factors in mind if they wish to invest in share market

Portfolio Diversification – When you plan for a decade, the diversification of the overall portfolio is crucial. There will be market ups and downs in ten years, and optimal diversification will insulate your personal finance. This will involve investments across asset classes, including stocks, bonds, gold, real estate etc.

Risk Management – You must be conscious of your risk appetite and review your risk exposure from time to time. Risk appetite decreases with age, so adjust your investment strategies as you grow older. Quite simply, your fixed income investments will increase with age, as you continue to reduce your equity investments and market exposure. 

Research Your Non-equity Investment Choices – Most investors tend to research thoroughly in equities but go for the predictable choices in the other asset classes. However, you can be smart even in fixed-income investments, like choosing structured debt funds that have a higher yield while keeping the risk low. Similarly, instead of an apartment or plot of land, you can invest in real estate investment trusts or REITs that offer liquidity and don’t involve large investments.

Reconsider your Equity Strategy – Your equity investment may undergo ups and downs in a ten-year cycle. There may be negative growth between one year and the next. However, the equity market tends to grow at 12-14% in longer cycles. So, once you select reliable stocks, it is better to ignore market fluctuations and have faith in the long-term growth of the stocks and the market indices.

Alternative Investment Strategies – Apart from all the traditional investments, keep an eye on emerging ones. This includes keeping an eye on the startups and newly listed companies, the unicorns and the soonicorns. You can also explore international markets and lower your Rupee risk by hedging with foreign currency investments. Exposure to international currencies protects you from any depreciation to the domestic currency. Besides, international investments can add stability and diversity to your portfolio.

Also Read: What is compounding? How does it benefit compounding of stocks and mutual funds

With an eye into the future, you can realign your approach towards investing and portfolio management. You will be looking at investment strategies and risks from a long-term perspective, which can reflect in the long-term growth of your investments.

Also Read: Why sectors like renewable energy are best IPO to buy

Source:

https://www.livemint.com/money/personal-finance/how-to-position-your-portfolio-for-the-coming-decade-11668620718527.html

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