How to Evaluate Your Financial Portfolio
- 1). Analyze the stocks in your portfolio. Look at each individual investment in your collection of stocks and determine their present condition. When you view your investments, you must decide if you think they will gain or decrease in value over the next year. Also, determine if you think they will perform well over a five-year period. Though all stocks have the potential to lose money, it makes sense to base your investment decisions on relevant issues, such as the condition of the stock market, present head of a company and a sharp decrease in clients due to the current economy.
- 2). Invest in more than one kind of financial vehicle. For instance, if you notice that the majority of your funds lie in the technology sector, branch out to other industries or types of investments, such as foreign currency or the financial part of the market. This causes your portfolio to take on less risk because you do not have too much money in one area.
- 3). Calculate the amount of money your investments have made since the last time you viewed your portfolio. This factor is crucial to most investors, because the bottom line to most investors is the type of profit their accounts generate. Each year you need to have a goal when it comes to the percentage of profit you want to earn. If you do not have a specific goal, you will invest blindly and may get lucky or lose everything that you invest. Another key aspect that you need to think about is the fees that erode the gains you achieve with your investments. Make sure that these fees do not take too large a portion of your gains, or switch to another type of account.
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