5 Golden Rules to Build a Strong Portfolio
In order to earn good profit in stock market, your first move is to have a strong portfolio. Following are certain set of rules that you must follow to build a strong portfolio.
- Live below your means.
With this, I do not mean that you must stay out of debt. However, you must think of cutting costs so you can save for both short- and long-term goals. The experts believe that if you do not do this then any trick will not matter as you will not have sufficient money to invest
- Cost matters.
While you approach our investments, you tend to focus on your returns. However, you must keep in mind that the cost is the only thing that matters.
- Buy the market/diversify.
Since, in the above point it is mentioned that cost matters, so the only funds you should be looking at are index funds. As we know that buying the market has a benefit. The benefit is that it naturally diversifies your holdings, hedging your risk.
- Do not look at past returns to gauge future performance.
Experts think that the new investors exactly do the same thing that is restricted. It is said that if you have made a first error then your second error will be that you looked at past returns. You tend to be looking at actively managed funds.
- Never try to time the market.
Usually, the investors try to time the low spot and the high spot. If you are doing this blunder then stop it right now.