While the equity markets have charged back to new highs from the lows of March 2020 in the wake of the early phases of the Covid-19 pandemic, there has been significant volatility along the way. And volatile stock markets are by no means just a recent phenomenon – from the bursting of the internet stock bubble in 2000 to the subprime mortgage market crash of 2008/09, the past few decades have demonstrated just how wildly equity markets can fluctuate.
While the stock market, despite all the ups and downs, has turned in above average performance over the long run, this doesn’t mean that investing recklessly and swinging for the fences without regard to risk is an optimal investment strategy.
When allocating assets within your investment portfolio, it makes sense to consider the potential downside as well as the upside.
Investment Portfolio Management Tools
While risk is the bad news about managing your portfolio, the good news is that there are a number of investment portfolio management tools that can help you gauge and manage the level of risk associated with your portfolio. Whether you use these tools to help build a portfolio or to make changes to the risk profile of an existing portfolio, they can be extremely valuable in helping you structure your portfolio in a way that reflects the level of risk you are comfortable taking.
Ziggma’s Portfolio Analytics Tool helps you measure portfolio risk by clearly displaying portfolio concentration at the stock and industry level. This enables you to take steps to bring your portfolio back into balance when needed.
While different investors will have different risk tolerances, the important thing is taking on the level of risk that fits your investment style and philosophy.
Why is portfolio risk management so important?
A key reason, besides peace of mind, is that it is likely to be a more productive approach in the long run. While taking on more risk than you are comfortable with might turn out okay if conditions are favorable, if the opposite is the case it could result in severe damage to the value of your portfolio and, in some cases, cause you to become disgruntled with investing.
In addition to the danger excessive risk can pose to your chances of meeting your financial objectives, if the disappointment caused by a portfolio downturn due to taking on too much risk causes you to withdraw from investing in equities altogether, or to go to the opposite extreme and invest too conservatively, it can also end up hurting your ability to reach your financial goals.
Investment Portfolio Simulator
Generally, an optimized investment portfolio is one that is structured to offer the greatest potential return for a given level of risk. Historically, institutional investors have had an advantage in building risk-adjusted portfolios because they can afford the big bucks needed to purchase investment analysis and stock portfolio management software.
Ziggma’s provides its portfolio visualizer free of charge, thereby leveling the playing field. It gives investors an easy way to gauge the riskiness of their portfolio as tracked by measures such as beta and portfolio concentration.
Now that individual investors have access to an investment portfolio tracker that can quickly provide them with relevant metrics to evaluate their portfolio risk, you can be proactive about managing your portfolio in a way that would be hard to do without this data.
Key to using portfolio management tools and techniques to handle risk is understanding the value of diversification. While it can be tempting to invest a large portion of your portfolio in a hot performing sector or stock, doing so runs the risk that you will suffer outsized losses if the stock or sector takes a hit.
By spreading your portfolio’s allocation between different stocks, sectors, industries and geographic areas, you can reduce the risk that this will happen. While every investor will have their own level of tolerance for risk, portfolio diversification, at least to some degree, is a strategy employed by the vast majority of successful long-term investors.
Ziggma Portfolio Analytics in Action
Ziggma’s Portfolio Analytics feature enables you to determine in seconds exactly how your portfolio stacks up in terms of risk, diversification or fundamentals. Historically, access to these metrics has been difficult for most individual investors to obtain.
Previously, they were stuck with mainly static views of their portfolio and its major characteristics. If individual investors wanted to get an updated accounting of risk factors such as portfolio diversification or individual stock valuation, in many cases they were forced to calculate these numbers themselves.
Now, where previously it would have taken most individual investors significant time to determine these numbers, with Ziggma’s stock portfolio tracker it can be done nearly instantly.
To make our portfolio management solution even more useful, we’ve added Ziggma Smart Alerts, which notify you when your risk tolerance levels have been violated. This saves you the time it would otherwise take to continuously check your portfolio diversification or individual stock valuation to make sure they are within your parameters.
Ziggma’s app offers the following benefits:
- Setting alerts is a breeze with our easy-to-use sliding scale technology. Smart Alerts can also tell you for example when a stock’s yield drops below a certain level. Our intuitive display makes it easy to see at just a glance your portfolio’s major allocation metrics.
- Access to these vital statistics at a moment’s notice can help you invest with confidence, knowing that you have the tools you need to manage your portfolio within your preferred risk parameters.
- In our effort to make Ziggma the best investment portfolio management tool around, we provide historical metrics with most of our data points, including the Sharpe Ratio and portfolio beta, so you can monitor how your portfolio’s risk level has changed over time.
- The software provides you with all the information you need to make changes if called for by your portfolio risk analysis. The portfolio risk view identifies the portfolio holdings which carry the highest risk level, while the Fundamental view shows the contribution each of your holdings makes to yield, growth or profitability.
Give Ziggma a Try
Give yourself a dependable ally in the battle against excessive risk by sampling Ziggma’s stock portfolio management software today. To see for yourself how Ziggma can boost your ability to manage risk within your portfolio, try the app for free.
Get started for free today.