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Secrets of Successful Wealth Management: 9 steps to the life you've always wanted, before and after retirement.

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Topic: Wealth Management

Investor Toolkit: 4 portfolio management balancing acts for lower-risk gains

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you a specific advice on successful investing, including tips on portfolio management. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away.

Tip of the week: “You’ll rest easy and profit more if you focus your portfolio management on balance instead of extremes”

At first, investing may resemble prize fighting. But successful investors see it as a multi-dimensional tightrope act. Here are 4 portfolio management balancing acts you need to perform to succeed as an investor.

  • Investor balancing act #1: A key part of your portfolio management strategy should be to follow our long-standing advice of spreading your money out across the 5 main economic sectors (Finance, Utilities, Manufacturing, Resources, and the Consumer sector). The proportions should depend on your objectives and the risk you can accept. The Finance and Utilities sectors involve below-average risk. Manufacturing and Resources tend to be riskier, and the Consumer sector is in the middle.
  • Investor balancing act #2: Balance aggressive and conservative investments in your portfolio, in line with your investment objectives, and the market outlook. Above all, avoid the urge to become more aggressive in your portfolio management as prices rise and more conservative as prices fall.

Invest in your Financial Future for FREE

Learn everything you need to know in '9 Secrets of Successful Wealth Management' for FREE from The Successful Investor.

Secrets of Successful Wealth Management: 9 steps to the life you've always wanted, before and after retirement.

 I consent to receiving information from The Successful Investor via email. I understand I can unsubscribe from these updates at any time.

  • Investor balancing act #3: Balance your holdings geographically. Avoid focusing your portfolio management on any one country or region. A lower-risk way to add international exposure to your portfolio is to hold multinational U.S. stocks, such as IBM, Yum! Brands and McDonald’s. We cover all three of these companies in our Wall Street Stock Forecaster newsletter. What’s more, today’s low U.S. dollar provides you with a rare opportunity to add high-quality U.S. stocks to your portfolio at bargain prices.
  • Investor balancing act #4: Market leaders and market laggards both deserve a place in your portfolio. Over long periods, high-quality stocks play leapfrog. Some of the lowest-risk, highest-profit buys you’ll ever find are overlooked or out-of-fashion stocks of high investment quality that are coming back into investor favour.

Next Wednesday, November 24, 2010, Investor Toolkit will look at how your portfolio can benefit from share buybacks.

You can get our full analysis of dozens of high-quality companies in the fast-changing U.S. market in our Wall Street Stock Forecaster newsletter. What’s more, you can get the latest issue absolutely free when you subscribe today. Click here to learn how.

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