Take stock - we have grown accustomed to evaluating our progress in nearly everything we do (an extra lap at the pool, another step up the corporate ladder), so tracking the progress of our portfolio is something that should become second nature to us. It is well worth your while to review your investments on a regular basis. You may find that it is time to rebalance your portfolio. However, remember that in most cases, you are investing for the long term, and something that is underperforming currently may well recover within a year.
Pay attention to your investments:
Diversification is a strategy for investing in a variety of vehicles, the goal of which is to help you minimize risk. It is an extremely effective concept that helps you to save and invest your money in ways that may help you feel more comfortable during times of fluctuation.
To be most successful at diversifying, you should apply three basic principles:
The benefit is clear - not all investments are likely to be growing at the same time, and in fact, some may be declining in value - but those that are healthy and providing solid returns will help offset any losses. And combining diversification with an investment horizon of 3 to 5 years is a solid investment strategy.
Some degree of risk is involved in any kind of investment, which is a secondary notion to the idea that higher risk often equates to higher potential reward. However, high risk may also lead to loss of capital, so you must be sure that you understand each type of investment you choose and ensure that their combination conforms to your level of risk tolerance.
To most effectively reach your goals, you must first put into place some means of measurement. Putting a dollar figure on your goals is a good start (e.g. the cost of a vacation home, or wanting to have a certain amount of money by retirement age). Determining a time frame for reaching these goals is essential.
To ensure that your goals are met, do the following: