As a beginner, building a prosperous investment portfolio is no easy task. A small percentage of investors are content in generating income from their portfolios without growing them. While this seems like a sound investment decision, it’s not. Many seasoned investors opt to have their assets or money increase with time rather than staying put. There are many strategies to grow a portfolio. However, if you want to be successful, this will depend on the time horizon, risk tolerance, and the principal amount invested. Growing a portfolio may take time on some methods and less time with others. This post will cover six tried-and-tested methods you can use as an investor.

1.  Understand The Market Timing

If you follow the markets or certain investments carefully, you’re able to beat the buy and hold strategy. This means timing the market correctly and with consistency. With this strategy, you should buy when the prices are low and sell when the prices are high. According to a Teeka Tiwari review, this method can yield higher and better returns than holding an investment over time. However, this strategy requires the ability to gauge the markets accurately. If you’re the type of average investor who doesn’t have the time to analyze the market on a day-to-day basis, it would be best to avoid market timing. We would recommend shifting your focus to other strategies that are geared for long-term engagement.

2.  Have Clear Goals For Your Investments

The first step in the portfolio sector is to understand why you’re investing. Additionally, it would help if you also understood what you expect of your money. If not, you will be making room for failure and are akin to driving a car without a steering wheel – zero purpose and no direction. Some common investment objectives include speculation, income, capital preservation, and capital appreciation. For instance, an investment portfolio aiming to attain capital appreciation will look different from an income portfolio; this means they’ll perform differently with time. If you’re not clear with your objectives, you will be disappointed in the long haul.

3.  Take the Appropriate Amount Of Risk

Financial experts say that investing involves betting on the unknown. For instance, an investor might think that investing in government bonds is a safer alternative than the stock market. In the real sense, government bonds are safe. However, they might not bring back enough cash to outperform inflation and give you the desired portfolio growth. In the long haul, you might not reach your investment goals with government bonds. This is why you need to establish a method to balance risks and returns. You should ensure your preferred method provides a combination of safety and portfolio growth.

4.  Be Diversified

Many seasoned investors combine diversification with the buy and hold approach. Various types of risks, such as company risk, can be lowered or eliminated through this strategy. Plenty of studies have shown that asset allocation is a critical factor in investment return and works well over long periods. The right combination of cash, stocks, and bonds can allow a portfolio to grow with less risk. This is much safer compared to a portfolio that is entirely invested in stocks. The significant benefit of diversification is that if one asset is performing dismally, another is performing better.

5.  Asset Allocation

The first step in creating a profitable portfolio is assessing your financial situation and goals. You should consider necessary items like age and how much time you have to grow your investments. Additionally, consider the amount of capital to invest as well as future income needs. For instance, an unmarried 20-year-old university graduate needs a different investment strategy than a 50-year-old married individual who’s about to retire—another factor to consider is risk tolerance and personality. Ask yourself whether you’re willing to stomach the potential loss of some cash for the possibility of greater returns. If this sounds like a decision you’re comfortable with, you can take your chances.

6.  Minimizing Investment Turnover

If you’re not willing to own a business for at least four or more years, don’t even think about buying shares. This is because the short-term stock market is volatile and irrational and may leave you with significant losses. Other than the volatility, holding onto investments has its tax advantages. Profits derived from long-term investments are taxed at lower rates than short-term investments, which are slightly higher. Additionally, dividends from such investments are taxed at minimal rates than distributions from recent inclusions to your portfolio.

These are some of the more uncomplicated strategies for making your money grow. You can also research more complex methods used by individuals and companies that use alternative investment solutions. Throughout your portfolio building journey, we recommend that you maintain diversification above anything else.