Investment portfolio management: how and why to do it? [GUIA do investidor iniciante]

Investment portfolio management: how and why to do it? [GUIA do investidor iniciante]

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The financial market, in fact, is a box of surprises and always has its ups and downs. So it is essential to have a investment portfolio management that minimizes risks and maximizes gains.

For this, one of the most common measures is asset diversification. Adopting this strategy, it is possible to make a dilution of risks is reduced volatility.

Since, allocating assets to different applications can balance risks, gains and losses. Avoiding, for example, that if you invest in just one application you end up losing everything in the midst of an unexpected crisis on that asset.

Finally, the management of investment portfolios to be effective requires knowledge of the financial market by the investor.

In Brazil, 42% of people claim to invest in financial products, revealed the UK residents Investor's X-ray survey.

To help you in the challenge of managing the types of investments correctly, we will explain in this article:

  • what is an investment portfolio,
  • what is its importance,
  • main tips on how to manage investment portfolios.

Investment portfolio: understand what it is

The investment portfolio is a investment portfolio made by individuals or legal entities, which contains a set of fixed and variable assets. It consists of:

  • public titles,
  • funds,
  • real estate assets,
  • actions, among other applications.

In order to build an investment portfolio in the right way, the investor needs to take into account his investor profile and, above all, know his financial objectives.

Being assertive in choosing actions means identifying whether you are more bold or conservative and also whether you are willing to take risks or prefer low asset volatility.

Do the terms for return on investments fit your objectives?

Are you willing to face a short, medium or long term for your investments to yield?

All of these points must be taken into account before an investment.

Empiricus research showed that 51% of people are willing to have a bolder investment portfolio.

Meanwhile, most of the assets in the financial market are still low risk and volatility, 45%.

In the article, “Investment: what is it, how to do it and what is the best option?” we made a guide on how to invest in the market.

Investment portfolio management tips

Data from a BlackRock study revealed that 37% of UK citizens do not invest because has no knowledge of the financial market and others 20% admit that the fear of losing everything is the main problem.

If you are one of those people, who either think this market is too difficult or who are afraid of losing money, we have prepared 7 tips on how to manage investment portfolios that will help you face the fears of the financial market.

Check out!

1. Draw a strategy in line with your investment profile

Are you conservative or bold?

Are you willing to take risks or do you prefer moderation?

Before managing investment portfolios, it is first necessary to know how to choose the assets and applications that best suit your investor profile.

Everything needs to be properly planned before you start investing on impulse. Especially if this happens, the chances of losing money are immense.

First of all, define the attitude you will take in the market:

  • conservative,
  • moderator,
  • bold.

The profile conservative it is for those who do not want to take risks.

O moderate it takes risks, but tries to balance them with returns, so it diversifies the asset portfolio between fixed and variable.

The bold invests more in variable, high-risk assets to try to earn more.

Another point of this strategy is to align your objectives with those yield terms (short, medium or long).

Evaluate whether your plan with investment portfolio management is to obtain returns in months or years, in order to adapt the assets to what you want.

Understand more about investor profile in the video below.

2. Diversify your investment portfolio

Diversification in the management of investment portfolios is part of investor prevention to reduce risks and increase the chances of good results.

When you choose only one type of investment, you are overexposing yourself in the market.

Balancing and diversifying the investment portfolio means allowing it to adjust to market volatility, which is certain over time.

Diversifying investment portfolio management means choosing to:

  • different segments for applications,
  • distinct markets,
  • asset classes that are not alike.

Variations that can be from the products themselves (fixed income, shares, LCA, etc.) to the class of assets (real estate fund, multimarket or fixed and variable income).

This portfolio diversification avoids large losses and can increase profits.

3. Look for good management tools

The management of investment portfolios can also be supported by tools that can facilitate the visualization and control of assets, since many actions require an almost daily dedication from the investor in decision-making, especially those at higher risk.

Many of these tools offer a free version, making it even more accessible to investors in general. Check out some of them and their functions.

  • home broker: is a tool for those who want to make purchases and sales of shares using the internet. Within this possibility, several financial institutions created the so-called Mobile Brokers, which are apps used so that the investor can manage and carry out negotiations in a practical and quick way.
  • Fixed income: through this application the investor can compare different investments in the market, by different brokers, having a vision of which stocks are most worthwhile at that moment. The app indicates values, rates, but it is good to be aware if the assets are fixed or variable before investing. The app is available for Android and iOS.
  • this app is focused on news from the financial market. It presents real-time quotes and updated information on the world economy. In addition, it has technical analyzes on the market and investment results of the main companies, based on their reports.
  • Real value: it is considered the most complete financial management application on the market. Through it, the investor has in his palm a complete view of investments in funds, variable and fixed income and cryptocurrencies. It is possible to have a view on all the applications mentioned through a graph that presents the performance of each one of them.

4. Enlist the help of experts

The financial market is no joke and the management of investment portfolios can be a failure and bring big losses if there is not a minimum knowledge of this scenario. For this reason, counting on the help of a specialist can be extremely beneficial.

Among the main benefits we can highlight:

  • the optimization of the time dedicated to the management process,
  • the practical experience of this professional in relation to the performance in the market,
  • expertise when defining the best investments by assessing all risks.

5. Use financial indicators

Good investment portfolio management requires the investor to periodically evaluate the performance of its portfolio assets.

However, one must have a reference to determine concretely whether that investment is being good or bad. Therefore, financial indicators are used for investment analysis as a basis.

After all, you may find income from 10%, but if the base indicator is 30%, it means that it is not that good.

Investors usually use the CDI rate as a reference in the multimarket or in fixed income investments, while in stocks, the Ibovespa appears as the main index to make a comparison.

Therefore, a good tip on this path of managing investment portfolios is to always be aware of the main market indicators, according to your products and asset class.

6. Make a periodic analysis of investments

Periodic monitoring is an important point in the management of investment portfolios, mainly in the sense of the need to:

  • settings,
  • corrections,
  • sales,
  • purchases.

Of course, if your investment is long-term, there is no need to keep looking at it every day. However, it is essential that from time to time you see if that investment is really paying off or if you need to take steps to adjust it to your goals.

In the case of short-term investments, closer monitoring is necessary, almost in real time, in order to be able to control the risks and take advantage of all the profit opportunities that present themselves in the market.

Investments are volatile, so any decision based on this periodic assessment of your portfolio's performance requires calm and nothing should be done due to the heat of the moment.

Especially because fluctuations are normal and if you decide to make a change with each fall of your asset, you may lose money in the near future.

7. Acquire knowledge in the field

The management of investment portfolios requires that the person has knowledge about financial administration, management and accounting.

Even if you are not a market expert at first, it is essential that at least there is knowledge about the functioning of the market.

For this reason, several financial and educational institutions have offered course options with a focus on investment management. So, a good choice for those who want to face the challenges of the financial market is to seek specializations in the area.

Whether taking a finance course, reading management books, e-books and articles so that entry into the market is not so scary and investments are more assertive.

Plan before you start

The financial market could easily be explained as a box of surprises, as we said earlier. Therefore, so that negative surprises do not become routine in the life of the investor, the management of investment portfolios needs to be done correctly.

It is necessary for the investor to have complete control over his money so that when deciding on a particular investment, he avoids large losses.

However, in order to achieve this level, it is first necessary to draw an investor profile and define the objectives of the investments.

The good investor is not one who does not take risks, but one who knows how to adapt his characteristics and skills to market opportunities.

In other words, first of all, he needs to know himself to have peace of mind in building his portfolio. The path of managing investment portfolios is arduous and full of challenges.

There is no such profitability at a snap and the investor needs to work hard to get good results. We hope that with this article we have helped you to follow a path of success in the financial market.

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