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How Can You Improve Your Investment Portfolio?

  • 2 min read

  • Highlights

  • Periodic stress tests for taking stock of your portfolio

  • Managing money better by setting financial goals

  • Making smart investments and avoiding debt traps

  • Creating contingency fund for emergencies

Investing at its core, is simpler than it seems. That is to say, the basic steps and ideas behind investing is easy, not necessarily the process itself. Additionally, taking stock of your portfolio and conducting periodic stress tests, is very important to keep it healthy.

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In fact, with the markets at an all-time high, now is a good time to improve your investment portfolio. You can invest strategically, in high-return, low-risk options that maximize your savings effectively.

Here are a few ways to boost your investment portfolio, and maximize returns:

Planning for financial goals

Setting financial goals will help you see how far you’ve come, when you finally meet these milestones. You can have short-term, medium-term and long-term goals. Short-term goals include vacations, further education, etc. Medium-term goals could include marriage, home, etc., and a long-term goal would be retirement.

Use online calculators to find out how much you’ll need to save every month to meet each goal. Remember to include the time constraints in your calculation. This exercise will tell you, if you are on the right track to meet your goals, or if there is need for a change in course.

You should also save money strategically, based on your income and expenses.

Effective money management

This is essentially about keeping a tab on your cash inflow and outflow. It is better to save whatever amount you need to meet your goals, before you spend any money.

However, some spending will be absolutely necessary, e.g., bills, groceries, rent, etc. On the other hand, you can control any extra spending you do, e.g., for movies, shopping, etc.

Making Smart Investments

You need to invest the money you save to make it work for you. While doing so, remember to consider asset allocation. Your portfolio should be diversified by investing in highly market-oriented assets like equities and traditional but sure income assets like fixed deposits. Make sure your investments match your financial goals and help you grow your money.
Oher safe investment options you can check are PF, NPS Bonds, Certificates of Deposit etc.

Learning About Investments

While researching about investments to make, don’t just go with advice from friends or family. Just because an asset mix worked for them, doesn’t mean it will work for you. Set your own goals, and learn about financial markets and concepts from experts to meet them.

Falling in A Debt Trap

Borrowing money can lead you into a debt trap, if you’re not careful. High-interest loans and credit cards can force you to borrow more money to repay them, leading you into a debt trap.

Additional Read: 4 Simple Ways to Manage Your Debt

So, when you do borrow, it has to be well-planned, so that you can repay the money as soon as possible. Otherwise don’t borrow.

Lastly, set aside funds for a contingency fund other than your investments, in case of emergencies. This should ideally be equal to about 6 months of your salary. Keeping all of the above points in mind, will help you prepare a portfolio that can help you weather any storm.

DISCLAIMER: The mentioned fixed deposit interest rates are indicative only, and may be subject to change periodically. Please check the interest rates on our website.

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