AWAKEN YOUR PORTFOLIO

Most people have a general idea how they want to spend their later years, but not many ever stop and figure out how they will financially achieve their desired lifestyle. Setting yourself up for investment success involves developing a realistic and informed perspective on how to put your financial resources to their best use.  

 

Famed investor Benjamin Graham once said, “Successful investing is about managing risk, not avoiding it.” Given that in the past 18 months the entire world has teetered on a knife edge of risk, it’s understandable that until now, many investors decided to sit tight and not look too far beyond their existing portfolios. 

 

With the global economy poised for a quick recovery, it is imperative for us as individuals and or organizations to build portfolios that are tailored to withstand future uncertainties and curve balls. Investors who hung on through spring downturns were rewarded for their patience while the rapid economic recovery has inspired many new investors to start buying equity shares for the first time. 

 

Whether you’re a long-time investor or just getting started, it is important now more than ever to prepare your investment portfolio for the new normal. 

ALIYU ALIYU

CHIEF EXECUTIVE OFFICER

BILAAD REALTY

Like many things in life, the idea of a perfect portfolio is personal. It depends on your goals, your personal and financial situation, and how much risk you can handle. This means that what works well for others may not be the right strategy for you. For example, some people may have made a fortune by buying older properties that they have renovated and flipped. Others may have made money by buying new houses and holding over the long term. 

There are dozens of ways to grow an investment portfolio, but there’s one strategy that trumps them all: balance. Regardless of your situation, age or experience, balance is the one thing that can help you maximise your profit and minimise your risk. It’s the one thing you need to factor into your portfolio if you want to succeed as an investor. 

Set a target 

As discussed in our January edition of our newsletter publications, target setting plays a vital role in all our endeavors. In building a successful portfolio, setting an end goal should be the first step. This will ensure that your investment strategy is focused and structured, and will give you something to refer back to when you need to make a difficult decision.  

Writing down your financial goals makes them realistic and concrete, rather than vague ideas that only exist in your mind. This target could be a passive income of $2,000 a week, or $100,000 a year, by the time you retire. Or something more directly related to your overall wealth. 

Diversify your portfolio 

Your next aim should be to build a diversified portfolio offering you optimal returns while also safeguarding corpus from undesirable eventualities.  

As the past year has shown us clearly, we can never be certain of what the future holds. Thus, it is imperative that your investment portfolio is tailored to withstand the uncertainties and curve balls thrown your way. In real estate, for example, you can achieve diversification by: 

 

  • Diversify your asset class: If your focus is on acquiring rental property, consider branching out into apartment buildings or commercial spaces. Meanwhile, if you want to stay within commercial real estate, consider buying and renting out a retail space.
 
  • Diversify your investment strategy: If you've been mainly buying investment properties, you could consider investing in a REIT, a real estate mutual fund, or a real estate exchange-traded fund (ETF).

 

Implementation 

Implementation is key to investment outcomes whether transitioning an existing portfolio from one strategy to another or investing fresh capital. Having decided on an amount to invest, the next tough decision is when and how to start investing. Your entry level will be directly impacted by the immediate direction from the day you invest. You could think the market is too high and wait but it could climb higher. Timing the markets is impossible, hence the best approach is to make a plan and stick to it. This enables better acceptance of the outcome. 

Rebalance Your Portfolio 

A periodic review also helps you assess whether you are being true to your asset allocation strategy. Without regular tune-ups, your portfolio might become too aggressive or conservative for your risk profile, which can decrease the likelihood of reaching your goals.  

When you’re set up for investment success — and know that your portfolio is built according to your objectives and investing style — you’re well-positioned to weather the ups and downs of the markets, avoid emotional decisions and make thoughtful, informed adjustments as needed. 

 

While there are diverse investment options to grow your portfolio, real estate investment remains one of the safest and most effective ways to build wealth. The real estate market may go up or down, but people will always need homes. Perhaps you’re just now getting your feet wet in real estate investment, or maybe you’ve already begun developing your portfolio. Either way, acquiring real estate is key to a successful financial future.