How to balance your stock portfolio Pt 3

© John Efetobor. All Rights Reserved

Have you heard of the saying do not put all your eggs in one basket because you stand to loose all your eggs. The same is true of your stock portfolio. In this final part of the article I want to share with you time tested and proven strategies that will ensure you have a balance stock portfolio.

Do you know that if you understand the art of balancing your stock portfolio; you will be immune from the swings of the economy and of course capital market. Let me quickly add here that you cannot build a balanced stock portfolio overnight; it takes much effort over time, once you have established your balance please don't stop there. You should continually study it in order to keep this balance. It may seem a difficult task, especially when the market is moving upwards or downwards. Otherwise you may expose your portfolio to higher levels of risk than you are willing and able to take

First, let me share with you 5 uncertainties you should watch closely; that is what your balancing art should strive to overcome:

The swings of the economy.

The swings of the bull and bear sessions. .

The swings of inflation.

The swings of the emotions of greed and fear.

The swings of demand and supply.

Strategies for balancing your stock portfolio

This strategy is taking into consideration your age profile, the size of your understanding of stock trading skills, your goals, your plans, and your heart. To have a balanced portfolio, you need to spread your choices around these scopes:

Small-cap – stocks-30% For the purpose of growing your portfolio; when the bull market sets in small cap stocks (value stocks, growth stocks, speculative stocks) with strong fundamentals tends to grow ten times higher than other stocks. Your prospect for profits is higher here.

Mid-cap-stocks-15% Invest in medium cap companies that are not easily affected by changes in both the economy and capital market. When the bear session creeps in, such stocks are able to cushion any slight depreciation you may encounter with small cap stocks.

Large-cap- stocks-25% Blue chips stocks guarantee your portfolio of steady dividends and scrip bonus. The size of your portfolio is enlarged over time with your investment in large cap stocks. They are a good compliment to any risk you may be exposed to with small cap stocks.

REIT (real estate investment trusts) - 15% Channel some of your funds to real estate investments trusts an a complimentary option to your efforts above. Your returns here are steady though not too handsome.

Foreign stocks - 15%

Keep in mind that these strategies and figures are only an illustration, not a recommendation or a must. You must constantly strive to improve your knowledge of stock trading; also work at your effort at fine tuning your portfolio.

Please don’t speed read this article, be sure to bookmark this site, so you can return to it again and again. Many visitors begin their days by spending 15-30 minutes here and report that it helps them become more focused, motivated, and confident.

How to balance your stock portfolio Pt 2

© John Efetobor. All Rights Reserved

Balancing your stock portfolio to me is an interesting game. When you consider and understand the dynamics involved you will appreciate that it is not one of the easiest of chores. There are different shades of opinions and suggestions as to the best strategies to adopt when it comes to balancing your stock portfolio, the intention of this article is not to take side or disagree with any camp but as the theme of the article suggests; to show you practicable, workable and objective tactics you can employ to balance your stock portfolio.

For your stock portfolio to be balance, there are very vital points you have to take into consideration; points in my opinion that really ensures that your balance is balanced.

The first is the dynamics of the human emotion of greed and fear: If you are an objective and realistic investor, you cannot discountenance this powerful influence in the art of balancing your stock portfolio. A swing in either of these emotions can tilt the balance of your stock portfolio. Talking about greed and fear; there are some factors that influence over these emotions you might be employing in your stock decisions.

One of them is the age profile of investors. The way an investor whose age range falls into say 20-45 years will behave, think, react, decide about portfolio choices will be different from an investor whose age bracket falls into 46-64 bracket ditto for an investor whose range bracket falls into say 65 years and above.

Let’s look at their different behaviors when it comes to balancing their stock portfolios:

20-45 years bracket

They are risk tolerant; they are not averse to risk. There are very adventurous in their mindset; they view risky stocks as opportunity for profits. They are given to amassing stock information that is why you will find them at seminars, they buy stock books more, and they have more presence in the internet. Suffice to say they are more voracious or do I say greedier.

46-64 years bracket

They are risk intolerant; they are very critical of opportunities that make themselves available at the capital market, sometimes for good reasons. Investors in this range bracket most times like to sit on the fence; why the 20-45 age bracket are very offensive in their approach to stock balancing, 46-64 age bracket are defensive in their mindset, speed and choices.

65 years and above

Investors in this range bracket depend more on experience to aid them in their approach to balancing their stock portfolio. They are passive and completely averse to risk. I know investors in this bracket who see investing in small cap companies as a death trap; they would rather spread their portfolios around fixed investments (bonds), large cap companies that holds the assurance of dividends and bonus scrip for them.

Please don’t speed read this article, be sure to bookmark this site, so you can return to it again and again. Many visitors begin their days by spending 15-30 minutes here and report that it helps them become more focused, motivated, and confident.