What Determines the Success of Your Investment?
Updated on 29 January 2017
Investments offer the best means to attain your financial goals. But investing in stock market can be tricky, if not done keeping certain factors in mind. So what determines the success of your investment? Let us see!
- Which Stocks You Pick: To be a successful investor, you need to allocate your funds wisely. The stocks you pick, decide the returns you will receive from the stock market. There are some investments which are riskier than others but they will give you high returns, while there are some investments which are less risky in nature but they will only give you minimum returns. So deciding where to invest in stock market depends on your risk taking ability. Our research team provides best trading advisory services to help you choose stock market strategies that work.
- How Much You Diversify: Going by the famous saying, “you shouldn't put all your eggs in one basket”, you should apply the same concept here. Diversification of your portfolio is essential because all your investments will not perform well all the time. With diversification, if one stock is underperforming, you will always have something in your portfolio which is performing well and vice versa. Like for example, your portfolio must consist of stocks of various sectors like pharmaceutical sector, real estate sector, FMCG sector, aviation sector, banking sector, etc. So if say, banking stocks are not performing well, your portfolio is not at risk, as there are other items in your portfolio which will be doing well.
- How Much You Rebalance: Rebalancing means bringing back your portfolio to its original stock/asset allocation mix. Rebalancing ensures that your portfolio does not overemphasize in a particular asset category and brings your portfolio back into line having comfortable risk level. So, you should consider rebalancing your portfolio by shifting your investments from overweight asset category to an underweight asset category.
- Your Investment Strategy: Do not get carried away by the market swings. Sometimes, investors get tempted to act aggressive, when the market is up and act defensive when the market is down. This leads to losing good returns and you will end up buying at a high price and selling at allow price. So, just stick to your investment strategy and avoid any kind of buzz going around you. Like for example, if your focus is long term investment, do not get distracted by the short-term price rise.
- Establishing Benchmarks: It is very important to set benchmarks in order to measure the performance of your portfolio. With benchmarking, you know how much your investments are worth keeping. Monitoring the performance of your stock with a stock in a similar industry will allow you to know if your stock is performing well as per the industry standards.
Indices Master has a highly qualified expert team who provide best stock market advisory services and can help you have a successful investment portfolio.