In this blog post, I will uncover some of my experiences and how I personally will manage my investment portfolio in order to achieve financial freedom.
Manage an investment portfolio is a very important skill to master.
I have written about my 7 steps to financial freedom and I recommend that you reach Step 3 before start investing.
It’s much harder to get ahead and stay motivated if you still have high-interest loans and no emergency fund.
It will pull you back.
For me, management is about avoiding too much risk but still compound your wealth
Easier said than done 🙂
My very short answer to the question about “manage investment portfolio” is:
Don’t use an investment advisor
I started investing back in August 2017 without any experience.
It was like a new world that opened to me when I discovered the many opportunities. I didn’t know much about investments, but my learning curve has been incredible.
The learning process is really so much better when you’re doing it yourself.
You slowly build up your knowledge, see the progress and become more dedicated. You really don’t need to know everything about “manage investment portfolio” and investment to get ahead.
The entry point is low (only 1 euro) and it’s easy to understand.
I won’t recommend you to pay for any investment advice or leave the management to others (like your bank).
There will always be a conflict of interest, it will for sure cost you some money and you miss out on the personal experience.
I have spent countless hours online looking into opportunities and other people’s experiences. Reading books and listens to podcasts.
It has been life-changing to me and I constantly feel a greater understanding. Believe in yourself, my friend 😉
My daily habits and even my mindset have changed significantly.
Now I strengthen my financially independent mindset daily, setting new goals, write about it on my investment blog and focus on my progress daily.
Doing it on my own also helps me investing purposefully with discipline and motivation.
Although it will take many years to reach my long-term goals it just makes more sense.
Diversify your portfolio
It is well-known advice not to put all your eggs in one basket. You may risk losing all of them.
In my opinion, you should diversify your investments to lower risks. That’s means you need a mix of investments across various categories and sectors.
Ideally, I’m working towards:
40% in several P2P lending platforms
There is lower risk with the buy-back guarantees and still some great annual interest rates (12-15%).
It’s very easy to handle and has very minimal expenses. The P2P platforms I recommend are also very economically strong so you are well placed in bad times.
35% in several index funds
There is a lower risk than stock picking and historically better returns in the long-term (8-15%).
I signed up for a monthly automatic payment to save brokerage fees. You have minimal expenses (under 1%) and it’s very easy to handle.
10% in real estate crowdfunding
I have invested a bit in real estate crowdfunding but it’s something I want to follow and learn more about.
I think it’s a great opportunity to lower risk with several rental properties at the same time but the annual return isn’t that high (5-12%).
However, it’s easy to handle because you don’t manage the properties.
It will surely yield more returns if you buy and rent properties on your own, but you are also responsible for everything in this process and afterward. It can be difficult and time-consuming.
I can’t deny that I choose to buy my own property instead. Time will tell.
10% in several cryptocurrencies, ICO’s, AI and new technology (High-risk investment)
Crypto is a new asset class and therefore considered to be high risk.
There is a lot of volatility and the market is very unstable.
It’s very difficult to determine the future of crypto but I think that it’s here to stay.
Unfortunately, you can experience reasonable high fees, and it’s not easy to handle for everyone yet. I think it will be easier and more accessible within a couple of years.
There is potential for extremely high returns.
5% in cash (without my emergency fund)
This money is my “opportunity money”. The risk is low because they just wait in the bank.
This also gives low costs, but there are also no returns.
If there are some changes that make it attractive to invest then I will use this money. They can boost my opportunities for a greater return.
At the moment I have chosen to invest most in some few assets. I’m still at the beginning of my journey but I want to slowly move towards more diversification.
💡 Try making your own asset allocation. How do you want to diversify?
Rebalancing the portfolio
I have invested in a cloud mining company called Hashflare without success. I suffered a loss of 4% of my portfolio back in June 2018.
Other investors are deeply frustrated because they have invested too much and want to raise a lawsuit. It was certainly a wrong decision when I got into this investment.
There is no long history of cloud mining bitcoin and I was drawn into the hype. The lesson is not to chase a hot tip.
Stick to your personal plan and don’t hurry to multiply your investments.
I started to rebalance my portfolio after this lesson.
I don’t want more than 10% of my portfolio in investments that I consider to be high-risk.
My strategy is not to withdraw or sell any investments because it will just cost me profit and I actually don’t regret any investments at all.
Instead, I will make regular contributions from my monthly income to make more balance.
It will give my portfolio a better long-term perspective in harmony with my vision and lower risks.
💡 How many percents of your portfolio is high-risk?
I also plan to rebalance the portfolio from time to time depending on the performance of my investments.
Some assets may increase in value compared to other assets and expose me to a higher level of risk.
It will still be best to just change how the new money is invested but I may also sell some investments that are increased in value to reinvest in other opportunities.
My portfolio management guidelines
All investments have good and bad times.
The stock market will crash, real estate will go down in prices and some loan originators will close due to competition. It will be uncomfortable sometimes.
To basically control myself I made my own guidelines. These will help me to adjust and manage my investment portfolio:
- Prioritize specific diversification to lower risks.
- Always try to minimize any expenses with deals, promotions, lower fees, and tax benefits.
- Control my behavior and habits with the financially independent mindset.
- Take action consistently based on knowledge and discipline rather than one-off events.
- Never panic sell but have a patient long-term perspective.
- Always follow up on my investments monthly and adjust.
That’s it. I am writing continuously while I’m through the process myself. I therefore only write what has worked for me.
I hope it has given you inspiration on this topic about “manage investment portfolio” 🙂