If you’re aware of how important it is to create a diversified investment portfolio, in order to take control of your future, continue reading to discover a few handy tips on how to go about establishing a diversified investment portfolio.
5 Invaluable investment tips:
1. Make sure to accumulate at least a few different asset classes to decrease your risk – Instead of investing all of the money which you’ve earmarked for investing in ordinary shares, it’s a smart move to purchase a variety of asset classes. As an example, you may want to purchase ETF shares and shares in property equity and private equity as well as ordinary shares. When it comes to investing, it’s important to avoid putting all your eggs in one basket, as if one asset decreases in value, your portfolio won’t be too badly affected.
2. Opt for investments which boast a competitive dividend yield and a share price which steadily increases – In order to receive two forms of income dividends and capital gains, it’s also a smart idea to choose investments which offer a competitive dividend yield over 5% as well as a share price which steadily grows each year. To find out how a company’s share price has performed over a five year period, simply find a five-year graph which illustrates the company’s share price over a five year period. Ideally, the company which you should invest in should have a share price that is higher now, than it was five years ago. While it’s okay if a company’s share price fluctuates slightly, which is normal, it’s important that overall the company’s share price continues to increase from year to year. Unless of course the company which you’re interested in investing has recently been listed on the public market and has no share price data to work off.
3. If you choose to invest in a managed fund make sure that you’re well aware of any fees that may be associated with your chosen fund – Some individuals choose to invest a portion of their investment funds in managed funds which are actively managed by investment experts. Especially individuals who don’t enjoy tracking their investments themselves. However, if you chose to invest in a managed fund, keep in mind that there will be fees associated with your investment. So it pays to choose a fund that doesn’t feature high percentage fees.
4. Don’t sell your shares too quickly – Many individuals make the critical mistake of selling their shares in a company if the share price drops suddenly. However, if you still believe that the company which you’ve invested in will experience success in the future, it’s a wise idea to keep your investment. As it’s likely that the share price in question will increase again, within a couple of months. –
5. Reinvest your dividends – Make the wise decision to reinvest all of the dividends which you’re paid out.
So if you’re focused on building your passive income and your investment portfolio, it’s a wise idea to keep all the investment tips listed above in mind.
