How to manage your investment portfolio?

When it comes to investing a lot of people get confused and think that it is difficult to manage a basic portfolio.  Most of the time we see capital being handed over to an investment advisor blindly and having them ask a few questions to screen what types of investments are best.  This is not the best approach when investing since it doesn't provide you with a understanding of what you are actually invested in.

Sure when market is up and times are great, it may feel easier to just hand over capital to an advisor .  But it's when the markets are volatile and you loose capital during market downturns you may have wished you had a better handle on your portfolio.

Most basic investment funds that are not hedge funds or private equity use streamlined approaches that are designed to invest in the market and many of these funds are over-weighted in equity.  They also charge expensive management fees on a monthly basis, and these costs compound over time.  There are simple methods to invest in similar market funds using ETFs that have significantly lower management fees.

Whether you want to manage your own portfolio or not you should at least understand the investment classes you are currently invested in, the weighting of these asset classes, and the associated management fees.

Please see below for a guide on the different asset classes available and how they perform in different market conditions, we must give credit to Ray Dalio, founder of Bridewater Capital who developed the theory of the All Weather Fund.

Period of Economic Growth:

Asset classes that perform well: Equities,  Corporate Bonds, Real estate, Commodities, and Emerging Market Bonds.

Period of Inflation:

Asset classes that perform well: Long Term Bonds, Commodities, and Gold.

Period of Economic Slowdown:

Asset classes that perform well: Nominal bonds, and long term bonds.

Period of Deflation:

Asset classes that perform well:  Cash since purchasing power increases.

For more information on the "All weather story" click the link below and read the article.


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