Every investor wants to have less volatility and higher investment from their investments. There are literally hundreds of websites that dedicated themselves to providing information on how to get the right portfolio mix through the application of a new fund or strategy. However it is difficult to predict if any new strategy will work and you can finally be as asset smart investor.
For the uninitiated, there is a easy understand path to getting the low risk high return portfolio mix:
- You would want to have a portfolio with funds in different markets and segments. For instance, you want to internationalize your funds not only keeping in the US market. There are markets such as India, China and South Korea that offers better return with a significantly lower risk. You would also want to hold a mix of long term and short term investments. This diversification strategy is the foundation of wealth management and is the common practise in the financial management industry
- A simple tactic to being asset smart is to “buy and hold” the financial assets and only re-calibrate the portfolio ratios or Strategic Asset allocation on a periodic basis. For instance, if you begin your portfolio with 50% in local stocks, 25% in overseas stocks and the rest in long term bonds, you would want to re-jig this mix probably 6 months down the road as market conditions change. If it not efficient to change the portfolio of an weekly or monthly basis as it would not have time to produce the results
- Recently, the “buy and hold” strategy has evolved to the “buy and modify” strategy. This tactic known as Tactical Asset Allocation involves keeping the market segment that you are already in but changing the ratios depending on the situation. This is very logical since you would have been familiar with the market segment and do not have to study a new segment all over again.
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