Four Steps to Boost Your Portfolio Balance

Regardless of whether you goal is to live comfortably, obtain financial independence or retire as soon as possible, the one thing holding you back may be a huge portfolio balance. Investing large sums of money on a regular basis is one way to boost the balance of your portfolio, but other steps are beneficial and even necessary as well. If you are ready to see your portfolio’s balance reach new heights, follow these effective steps.

Diversify Intelligently

An undiversified portfolio exposes you to greater financial risk. Consider, for example, if your portfolio is heavy in real estate investments in a specific area of the country and the market tanked. As another example, you may have a large stock portfolio with most of your funds invested in tech stocks. While the entire stock market may only crash once in a blue moon, sectors can plummet quickly and more frequently. In addition, when the stock market does crash, not all sectors may be affected in the same way. By diversifying your portfolio across many types of investments as well as numerous sectors, you can mitigate risk substantially. You must determine your personal threshold for risk before you can determine the right asset allocation to strive for.

Rebalance Regularly

Many savvy investors overlook the importance of portfolio rebalancing. The last time you balance your portfolio, you may have determined a specific asset mix based on risk tolerance, growth projections or performance and more. However, as you infuse more capital into your portfolio and as different investments grow, your portfolio will no longer be balanced as desired. You will periodically need to rebalance your portfolio so that it remains on-track to achieve your desired rate of return as well as to mitigate exposure to various losses. Annual rebalancing may be ideal for many investors, but you will need to determine the right rebalancing strategy and timeline for you.

Take Advantage of Tax Benefits

Many investments are tax advantageous. When you take advantage of investments with tax benefits, you may increase the overall return that they provide to you. For example, IRAs, 401k plans, real estate, some business ventures and more all have different types of tax advantages. You may notice that your portfolio’s value increases a faster rate because of these advantages. In order to maximize the tax advantages that your investments provide, it may be wise to work with a financial planner or expert who can help you to strategically use these benefits while also working toward your investment goals.

Educate Yourself

When most people think about investments, they think about stocks, bonds, CDs and mutual funds. Some may dabble in real estate investments or private ventures as well. However, these are only some of the many different types of investments available to you. Each has a different rate of return, risk level and other features that you need to know about. As a growth-minded investor, it is in your best interest to regularly seek new information about investments that are new to you. For example, you may have seen the possibility of options trading through your online stock trading platform, but you may have never thought about learning more about options. Options Animal is just one of many avenues that you can use to educate yourself about this type of investment. Online articles, live classes and finance books are a few of the other ideas to consider. Education is an ongoing process rather than something that is completed.

Increasing your portfolio balance is a leading goal, but it can be difficult to accomplish. Even when you regularly infuse your portfolio with new asset purchases, you may not see the rate of return desired. While account balances will increase and decrease over time, these tips will help you to maximize your returns, diminish your exposure to the risk of loss and see the growth of your portfolio skyrocket over time.

About the Author
Sia Hasan is a tech entrepreneur by day and a freelance writer by night. Her passion lies in business technology, efficient and sleek programming, and customer relationship management. When she doesn’t have her nose pressed against her computer screen, you can find her spending time with the loves of her life, her two dogs, Pixel and Vector.

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