Improve Your Investment Portfolio Returns The Right Way
Ever since the pandemic uncovered people’s financial blindspots, many questions have arisen regarding savings, emergency cash, and investing. Given the current circumstances, is only natural that these topics are trending.
However, since these areas form only a minor part of your overall portfolio, the amount of attention given to it is undue, to say the least. Only 20-25% of your portfolio accounts for overseas investments, equity allocation, or emergency funds. A larger portion of investments goes into safer instruments such as fixed deposits or insurance policies. These investments yield low returns and are usually a drag on the portfolio.
Why Focus on Minimal Returns?
Typically, the conversation surrounding emergency cash is on where and how much to invest. However, there’s been a shift in the conversational paradigm where people are now questioning how returns on their emergency funds can be maximized. One certain investor claimed that their bank had decreased the interest on its savings accounts.
As a result, they decided to shift to arbitrage funds, which, compared to ultra-short duration debt funds, deliver better returns. Remember that the purpose of your emergency fund is not high returns but rather quick access. The recommended holding period for an arbitrage fund is a year, and it can have long periods of low-yield returns, as well as exit loads.
Missing Out On the Gold Mine
By focusing your attention on minimal returns, you might miss out on enhancing profits on the larger chunk of your portfolio. This includes the fixed deposits, investment-linked insurance, as well as EPF.
If you wish to improve your financial stance, the following are the five main factors you should concentrate on.
1. Jumping in and out of investments won’t do you any good and will only raise the cost you’re incurring with no returns. Do your research before investing, and once you do, stick with the investments you’ve chosen. Consistency is the rule of the investment world.
2. Your health insurance and emergency funds come before any investment. Make sure you have enough of both before looking at other assets.
3. Avoid going for investments with tax deductions. Tax-efficient investments should be at the top of your list. Lesser taxation means you get to reap higher returns.
4. An investor should have 7-10 equity funds, on average, as it is imperative to have reasonable exposure. Sure, it all comes down to the risk profile, but the maximum you should reduce this is 4-5 funds.
5. High-cost instant loans can be disastrous for your portfolio and can even wipe it out completely. They cost 16 to 22 percent annually and don’t really do much for your financial life.
Sure investing in international stock can be very exciting but, you can’t ignore your entire portfolio for the sake of 5-10 of it. Instead of being fixated on less important parts of your portfolio, it is advised that you take up tactical investments to boost your portfolio.
More in Advisor
How to Save Money on Taxes During the Cost of Living Crisis?
As the cost of living is reaching its all-time apex, people are looking for effective ways to save money. Thanks to...May 27, 2022
Tips To Help Students And Graduates Pay Off Student Loans
If you borrowed money to pay for school, your first question might be how best to pay off your student loans....May 27, 2022
How to Effectively Manage Your Money During the Cost of Living Crisis?
Today, we are living amidst one of the gravest cries of human existence: The cost of living. Since the pandemic began,...May 26, 2022
What is the Best Piece of Financial Advice Every Parent Should Give His Teenagers?
It is alarming that most primary and secondary schools across the US do not teach teenagers finance and the utilization of...May 26, 2022
4 Best Tips to Amp Up Your Stock Market Game
At some point in life, you must have wished for a side-hustle that’s as rewarding as your 9-5 job and earns...May 22, 2022
Jim Slater’s Tried And Tested Methods To Improve Investment Returns
James Derrick Slater was a British accountant, investor and business writer. Slater rose to prominence in the 1970s as a businessman...May 20, 2022
Get Prepared For Career in IT With These 4 Tips
If you are looking into other possibilities for a new profession or career change, joining the IT industry may be excellent....May 15, 2022
Looking to Invest in Gold? Consider These Fruitful Tips
Gold is perhaps the most popular and profitable commodity for investment today. Thanks to its diversity of investment options, investors remained...May 6, 2022
Investment Tips For First-Time Investors That Should Be Follow
Adhering to some essential and necessary investing tips helps you to grow your wealth and provide you with financial security and...May 5, 2022