Check whether your investment portfolio is properly diversified
Investing is a crucial part of building wealth over the long term. However, even the most experienced investors can sometimes find that their investments are not performing well. This can be frustrating, but it’s important to remember that investing is a long-term game and some sound strategies can help one reap rich dividends. Here are five things you can do:
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Review investment strategy
The first step in addressing underperforming investments is to review your investment strategy. Take a close look at your investment goals, risk tolerance, and time horizon. Ask yourself if your investment is aligned with your long-term goals and if you are comfortable with the level of risk you are taking. If you find that your investment is not aligned with your goals or you are taking on too much risk, it may be time to re-evaluate your strategy and make adjustments.
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Reassess & diversify portfolio
Look at the mix of assets in your portfolio and determine if it’s properly diversified. Diversification helps to reduce the risk of losses by spreading your money across different types of investments. If you find that your portfolio is not well-diversified, it may be time to rebalance your portfolio and add new investments to spread your risk and get good returns.
Adhil Shetty, CEO, Bankbazaar.com, says, “Different types of investments tend to perform differently at different times. For example, stocks may perform well during periods of economic growth, while bonds may perform better during periods of economic downturn. By diversifying your portfolio, you can take advantage of these different performance trends and potentially earn higher returns than if you were only invested in one type of asset.”
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Analyse the underperforming investment
When one investment is underperforming, it is important to analyse why it is not performing as expected. This means looking at the fundamentals of the investment, such as its financials and competitive landscape. If you find that the investment is underperforming due to factors beyond your control, such as a market downturn or regulatory changes, it may be best to hold on to the investment and wait for it to recover. However, if you find that the investment is underperforming due to poor management or a weak business model, it may be time to cut your losses and sell the investment.
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Seek professional advice
If you are unsure about what steps to take with your underperforming investment, seek professional advice from a financial advisor or investment professional. They can provide objective insights and help you make informed decisions about your investments. Additionally, they can help you identify other investment opportunities that may better align with your investment goals and risk tolerance.
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Stay patient
Don’t panic and make hasty decisions when an investment is underperforming. Instead, stay patient and trust your investment strategy. Remember, even the best investment strategies can experience short-term setbacks, but over the long term, sound investment strategies tend to yield positive returns.
In conclusion, if your investment is not performing as expected, stay calm and take a step back to assess the situation. You can then make informed decisions about your investments and stay on track to achieve your long-term investment goals.
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COURSE CORRECTION
If your investment is not aligned with your goals, re-evaluate your strategy and make adjustments
If your investment is underperforming due to poor management or a weak business model, cut your losses
A financial advisor can help identify investment opportunities that are better aligned with your investment goals and
risk tolerance.
