When you purchase an investment, you are purchasing something that will inevitably depreciate in value over time. Various portfolio management approaches, on the other hand, can help you influence, if not completely control, how your investments perform. Regardless of your unique circumstances, here are some essential portfolio management concepts that underpin an efficient investment approach. Consult an SGI Securities Financial Advisor to learn more about how these and other opportunities apply to you and how you can take advantage of them.
Asset Allocation
Asset allocation, or how your investment portfolio is structured by investment type, duration, amount, and so on, is "the primary determinant of returns," according to an authoritative investment industry source. Choosing the right asset allocation and adjusting it to changing conditions can put you on the right track to achieving your financial goals. It's also an important risk-reduction method.
Diversification
The essence of asset allocation is diversification or adopting a variety of investment vehicles with various performance characteristics to produce a better total return. Diversification decreases individual investment value volatility by foregoing some highs in order to prevent some lows.
Managing Risk
Risk management entails more than just avoiding a financial loss. It also entails outperforming inflation and capturing potential earnings. Risk is caused by a variety of causes, some of which are controlled and others that are not, but the risk can be managed. A well-thought-out investment strategy can help you manage risk more effectively.
Managing Reward
Rewards are accompanied by responsibilities and obligations. Obtaining favorable returns, for example, frequently necessitates the payment of tax. However, not all investments are taxed the same way: some are given a break. A loss in one investment may also be countered by a gain in another. These are important factors to consider while developing a successful investment strategy.
Contact your SGI Securities Financial Advisor and take the first step toward the financial future you desire.
