Every investor, whether a first-timer or a seasoned one, wants a profitable investment portfolio. And one proven way to achieve that is by consistently growing your portfolio.
There are several tested ways to grow a portfolio, but the best approach will depend upon a number of factors including your risk tolerance, the amount of capital you have, and the time you can afford to wait to collect returns.
As a rule of thumb, investment growth can happen over either in the short or long term, but considerable growth in the short term generally comes with a significantly higher degree of risk.
Let’s go over some strategy tips you can try to effectively grow your investment portfolio.
Don’t put all your eggs in one basket
You can limit or completely eliminate many types of risks by diversifying your investments. By finding the right combination of stocks, bonds and cash, you will be able to grow your portfolio with much less risk and volatility as compared to putting all your capital in stocks.
Diversification works because it protects you when one asset class is performing poorly, limiting your losses to that asset class alone.
Time your investments accordingly
If you follow the market developments and monitor specific investments religiously, you will be able to assess and predict the markets correctly and consistently. This allows you to invest when prices are low and rake in profits when they are high. This strategy will require the ability to accurately gauge market conditions but is very helpful in growing your investments.
Look into growth sectors
Depending on your tolerance for risks, you may be able to aggressively grow your investment basket by investing in specific sectors of the economy that are experiencing massive growth. These sectors include technology, small-cap stocks and energy. They may carry greater risk and are more volatile than others but they offer above average returns. You can minimize or offset these risks by carefully selecting your investments and by holding your assets longer.
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