How stock market investors can build an optimally balanced portfolio ?

Posted by epicresearchindore on January 18th, 2018

Every individual investor has goals which he is willing to accomplish by making an investment in stock market. To achieve these gaols and sustain in market on long term basis it is required to construct an optimum portfolio . An investors should ideally first learn about his risk bearing capability and design his portfolio accordingly. For improving returns from market financial advisory services can be referred as well. Investors should aim to maintain a well diversified portfolio as diversification helps to limit the impact of any particular asset class on your overall portfolio. At times some asset class do not perform well and some does, diversification helps to compensate the loss caused by one from the good performance of other. By balanced portfolio it is meant that specific portion of your portfolio allocated to each asset class is according to your desired risk/reward ratio.

Following are some suggestions to build an optimally balanced portfolio :

1) Traders should avoid taking concentrated position i.e high percentage of portfolio should not be devoted to one investment. Ideally total value of your investment portfolio should be divided among different types of asset class.

2) You may opt for investment which can offer greater returns but consider the fact that high returns are associated with high risk. To protect your portfolio from market's volatility in any particular asset diversify your investment which will help in diversifying the overall risk. Your portfolio may consist of assets which have more or less risk then your risk bearing capability but you should try to maintain average risk of your entire portfolio according to your risk tolerance level. For example you can not face high risk in market then you should look for asset which can offer you steady returns.

3) Proper capital allocation is important. On basic level it is not difficult as your portfolio may consists of stocks, bonds and commodities but you can further sub categorize them on the basis of potential returns they can offer. First learn risk and returns associated with different asset class and then allocate funds to them.

Some common portfolio problems are discussed below :

1) Often investors follow a one sided approach i.e their portfolio consists of stocks belonging to particular sector.

2) Large capital allocation to one investment type is another one core problem.

Building an optimally balanced portfolio is really important to earn expected returns from market and control losses. Investors often do not understand how important it is and tend to loss their hard earned money in market.To maintain an ideal portfolio there are some core basic rules which must be followed. If you are unable to design your portfolio then you may take advise from financial market experts or portfolio managers.

 


epicresearchindore

About the Author

epicresearchindore
Joined: June 3rd, 2016
Articles Posted: 72

Claim 1 FREE Stock! No Purchase Necessary!
You have a 100% chance of receiving one free stock! Click to claim and have a chance to get one share of Facebook, Visa, Microsoft and others for free!
BitKong: Fairest and most thrilling Bitcoin casino on the market
Win serious funds fast when you stack the BitKong bonus combo, cash in on the referral program, or hit the massive jackpot then walk away with your life changed.
FREE App - Earn up to 25/gal cash back on gas!
Download this FREE app and earn cash-back when you buy gas, groceries and food! 100% FREE to join and FREE to earn cash back on your everyday purchases!
Quality Office Furniture USA Shipped Direct - Madison Liquidators
Nationwide vendor of quality office furnishings including Desks, Office Chairs, Conference Tables, Cubicles and more!
Earn HNT Tokens with a Helium Hotspot!
Pre-Order a Helium hotspot and earn HNT tokens that are redeemable for USD. Set it and forget it!
Lolli: Earn Free Bitcoin When You Shop Online!
Lolli is a rewards application that gives you bitcoin for shopping at your favorite online stores.