In our fast-paced world, investing can often feel like a rollercoaster ride filled with uncertainty and complexity. For many investors, the uncertainty as to whether they are on track to reach their long-term wealth goals is a major source of stress.
Fortunately, by following a simple set of guidelines, investors can navigate the investment landscape with a sense of calm and confidence. In this article, we lay out three easy-to-implement investing principles that can transform your investment journey from a stressful endeavor into a serene and mindful experience. Say goodbye to sleepless nights fretting over market fluctuations and hello to a more balanced and thoughtful approach to growing your wealth.
Chances are that you, like most investors, own several investment portfolios. For starters, you may have one or several brokerage portfolios. In addition to that, depending on your age and how many jobs you have held, you are likely to own one or several 401k or IRA accounts. And if you manage your investments jointly with a partner, you may want to add their portfolios to the list of investable assets to track. Added together, you may be looking at a high-single digit number of accounts to track.
The first step to get peace of mind as an investor is to take control of your investments. This starts with viewing all portfolios in a single consolidated view. In Ziggma, this consolidated view is called the “All Accounts” view. Only if you consolidate all your investment accounts into a single portfolio, you will be able to determine whether your investments are truly diversified, how much income you are drawing from your investments or how much you pay in fees.
Most brokers will not provide account consolidation, and even less so insightful portfolio analytics. Fortunately, with open banking regulation giving you ownership over your data, you can use third party services that provide these critical insights. New authentication methods (OAuth) have made the process of linking your accounts highly secure.
By consolidating all your accounts into a single one, you will remove a great degree of uncertainty. A portfolio tracker with a great dashboard lets you evaluate portfolio diversification, income, risk and even your portfolio’s growth potential.
Taking control of your investments by getting the right insights on your investment portfolio is the crucial first step to becoming a better investor and enjoying peace of mind throughout your investment journey.
2. Track your investment portfolio
After having obtained the key insights on your consolidated investments, it’s time to start tracking. The natural objective of portfolio tracking is to ensure that your investment portfolio stays the course.
Portfolio level tracking
At the portfolio level, making sure that your portfolio stays diversified must be the number one objective. You can greatly mitigate risk by identifying and addressing over- and underexposures in your portfolio. An imbalanced portfolio can lead to unnecessary risks and jeopardize portfolio performance.
Income investors will want to monitor portfolio income to make sure that their income from investments consistently grows. Investors holding stocks should actively monitor the overall quality of their stock holdings as well as their growth profiles.
Holding level tracking
Every stock investor should be monitoring companies’ business key performance indicators at the holding level. While this is common practice among professional investors, most private investors fail to monitor whether the companies they own continue to progress after they become part of the portfolio. Yet, to create value for their shareholders, companies must continuously improve on key performance indicators, such as growth and profitability.
By putting in place proper tracking mechanism, which is facilitated by innovative features, such as Smart Alerts, investors can greatly minimize risk, and inversely maximize peace of mind.
3. Portfolio optimization
Economic cycles and financial markets are in constant movement. This is reflected by fluctuations in every investor’s investment portfolio. Over time, these require adjustments in every investment portfolio, in order to stay on track to reach the expected investment objectives. Inflows into the portfolio or outflows often also require portfolio adjustments.
Hence it is imperative that investors make investment decisions that are optimal given their portfolio. Too many investors get overexposed to a given industry or sector because they fail to consider their current portfolio composition when buying a stock. Many end up exceeding their risk tolerance.
Now available – Portfolio Simulator
Making an optimal investment decision in light of one’s current portfolio is hard, if not impossible, to do with a spreadsheet. Fortunately, tools that were previously available only to institutional investors, such as a portfolio simulator, are now available to individual investors. By providing insights into the potential impact of investment decisions on key portfolio measures, a portfolio simulator is a powerful tool to make sound financial decisions that align with an investor’s goals and objectives.
Innovative tools, such as the portfolio simulator, can greatly simplify the challenge of making optimal investment decisions for private investors, and thus remove a further potential source of stress.
No need to sweat it
By applying the three straightforward principles of long-term investing, any investor can greatly reduce the degree of uncertainty in their investing journey. Market innovation and continued progress in technology act as facilitating factors. As individual wealth building gains in importance, stress caused by uncertainty regarding your investment portfolio should not keep you away from the long-term value creation powered by financial markets.