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Four tips to help you build a top performing investment portfolio

by , 01 October 2015

If your goal is to build a long-term investment portfolio that performs well over the years, there are a few things you can do to improve your chances of success.

It all comes down to how you manage your portfolio.

Read on to discover four tips to help you build a top performing portfolio…


Investment tip #1: Spread your risk


When building your investment portfolio, it’s vital to spread your risk across different sectors and industries. For example, don’t hold ten different bank and financial stocks. You’re too dependent on the performance of one sector.

All sectors perform differently and go through different cycles.

For instance, following the dot.com bubble bursting, technology stocks performed terribly, but mining stocks excelled. Now the opposite is true as technology stocks are doing very well and mining stocks are struggling.


Investment tip #2: Keep your investment costs low


Try to keep your investment costs as low as you can. This means shopping around for the best deal you can find with a stock broker. And don’t overtrade.

By constantly buying and selling shares, you’ll spend a lot of money on costs.

Take your time buying shares, carefully selecting your picks.


Investment tip #3: Take time to rebalance your portfolio


You should do this periodically to ensure your portfolio doesn’t become too dependent on one or two shares.

For example, if a couple of your stocks do amazingly well in comparison to the rest of your stocks, it can make the performance of your portfolio rely on these stocks too much.

You could think about selling out some of your holdings to reduce your exposure or run tight trailing stop losses so you sell as soon as there is any sign of a down turn.


Investment tip #4: Don’t obsess about your portfolio’s performance


It goes without saying that you’ll want to check how your portfolio is performing, but don’t pay close attention to daily ups and downs. This can lead you to make impulsive decisions about selling out.

Instead have a solid exit strategy in place so your emotions don’t rule your decisions. You could think about running trailing stop losses for instance.

So there you have it. Four tips to help you build a top performing investment portfolio.

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Four tips to help you build a top performing investment portfolio
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