This article will provide you with 6 achievable ways to boost your portfolio returns. Whether you are a beginner or an expert, you can improve your portfolio to perform better in the market.
To have a more profitable portfolio, you have to invest regularly and consistently no matter what the market is doing. However, throughout investing long term, there are still some strategies that you can implement to boost your portfolio returns.
6 Achievable Ways to Boost Your Portfolio Returns
Check out 6 achievable ways to boost your portfolio returns over time below
Diversify Your Portfolio
This is one way that you can boost your portfolio returns. Diversification involves adding multiple asset classes to your portfolio with an appropriate allocation percentage to each asset. All assets in the stock market are prone to volatility. However, when you diversify, you’ll spread your money across different asset classes.
This is a way to reduce portfolio risks, potentially increase your overall returns, and improve long-term portfolio performance. Hence, you need to diversify your portfolio in different asset classes including stocks, bonds, commodities, real estate, ETFs, and/or others.
Furthermore, no matter how well your portfolio is performing, ensure that you allocate appropriate percentages to both fixed-income assets and cash equivalents.
Over some time, you’ll find out that your portfolio has drifted away from the way you originally planned it. If your portfolio was originally allocated 50/50 for stocks and bonds, it could change to 60/40 with time.
Rebalancing is the process of selling some investments and buying others to readjust your investment portfolio. This is a way to return your portfolio to its state it was built initially based on your risk tolerance.
By rebalancing, you can potentially enhance the performance of your portfolio over time. In addition to this, it will also help you to maintain the appropriate level of risk in your portfolio based on your risk tolerance.
Minimize Investment Fees
There are numerous fees that investors pay. This includes trade commission fees, fund expense ratios, contract fees, advisory fees, transfer fees, and more. The fees associated with investing eat deep into the pockets of investors.
If you are paying high investment fees, it could be reducing the returns that you’ll potentially get from your portfolio. Hence, you need to cut back on some fees. One way to do this is to look for brokers that charge either low or no annual fees and also charge low transaction costs.
Minimize Investment Taxes
Similar to investment fees, taxes also have an impact on your portfolio’s performance. Generally, when you earn or spend money, a tax fee is deducted from it. Also, when you earn money from the stock market, a tax is charged on your capital gains.
Although it is nearly impossible to avoid paying taxes, you can minimize paying heavy taxes. A good way to maximize tax efficiency is to put your investments in tax-advantaged accounts like 401(k), HSA, Municipal funds, and more.
Invest Long Term
To be a successful investor requires both time and patience. The time horizon of your investment also determines the performance of your portfolio. Furthermore, focusing on your investments in the long term even in a bear market will lead to more impressive long-term returns.
Work With a Financial Advisor
Also, with the help of a financial advisor, you will be able to boost your portfolio returns over the long term. A good financial advisor will provide you with the best investment advice and portfolio management tips. Furthermore, with a financial advisor, you’ll also get the best asset allocation strategy based on your risk profile.
What are the Types of Investment Strategies?
The common types of investing strategies are growth investing, value investing, quality investing, index investing, and buy-and-hold investing.
What are the Qualities of a Well-Constructed Portfolio?
The qualities of a well-constructed portfolio are
- Effective diversification.
- Active management.
- Tax efficiency.
- Cost efficiency.
What are Some Factors That Impact Portfolio Allocation?
Two major factors that affect portfolio allocation are
- Risk tolerance. Investors have a level of risks that they can tolerate and this impacts how they are going to allocate their assets in their portfolio.
- Time Horizon.
What is the 60/40 Portfolio?
The 60/40 allocation involves holding 60% of your portfolio in stocks and 40% in bonds. By doing this, investors believe that they’ll maximize the returns from stocks which are riskier and bonds which are more conservative,
What are the 5 Best Practices of Investment?
Below are the five best practices for investment
- Invest early. This is one of the best ways to build wealth.
- Have a solid investment plan.
- Invest enough.
- Also, invest regularly.
- Diversify your portfolio.
What are Some Ways to Invest?
There are numerous ways to invest, some of them are low-risk while others are high-risk investments. However, depending on your tolerance for risks, some of the ways to invest are
- Stocks, mutual funds, and ETFs.
- Treasury securities and bonds.
- Real estate.
- Precious metals.
- Peer-to-peer lending.
- Invest with a Robo-advisor.
- High-yield savings account.
- Certificates of deposit.
- Invest in S&P index funds.
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