If you want to rebuild your investment portfolio and recover your losses then it would be good to start right now. Begin with a list of things that you like to do little by little in order to improve your investment without feeling so stressed in thinking so much about financial goals that you want to achieve in the near future. This will also depend on how long you have time until your retirement year will come.
Try to be wise and smart in your investment strategies. Allocate your funds appropriately. Make sure to distribute your money wisely so that it can balance with how much time you have until retirement. For example, if you'll need the money soon, place it in more liquid investments.
Some parents want to leave a little nest egg to their loved ones especially to their children. These people want to save more by opening saving accounts so that they can help them in times of financial trouble. This is good but you also need to invest something for yourself as you get older so that you will not bother them for your own needs.
If they are already adults then they know how to take good care of themselves. You also need to let them become responsible people so that they will not have a hard time in adjusting when they have financial problems in life. Today could be the exact time where you can lay the foundation in rebuilding your investment portfolio.
- Moderately Challenging
Think positively when you are rebuilding your portfolio for the future. Look at the bright side and think for the long-term opportunities to come. If you are so negative about the future of the stock market due to its recent downfall then you need to become a bit optimistic so that you can rebuild your investment portfolio gradually by managing your money wisely and responsibly.
It could be a good time to invest these days with focus and determination by understanding the fundamentals. You need to know the qualitative and quantitative information which contributes to the economic well-being and the consequent financial valuation of a company or currency.
As an investor, you need to analyze these fundamentals so that you'll develop an estimate as to whether the unexposed asset in the market is considered a worthwhile investment. For example, you may focus on companies first that are able to grow their own businesses and create profits for their respective shareholders.
Avoid adding up big and risky funds. If you feel that you lost much time when most investors had bought those profitable stocks then you need to think that this could be so risky on your part. Do not be tempted to gain profit immediately because you may lose more money in the long run.
You may try to measure the level of risk that you are going to take based on statistics. You may use a standard deviation since it can disclose how much you can expect a fund to vary from its average. For example, the higher the standard deviation, the more unstable the fund will become.
Use the investment strategy called dollar-cost averaging where an investor may buy securities in fixed dollar amounts at regular intervals, despite where the direction of the market is headed. This is the method where if stock prices rise, an investor will buy less, and as prices fall, then he or she will buy more. Avoid too much risk by setting and following a certain rule so that you can average yourself into the market over time by not adding most of your money into high-risk investments.
Continue to invest on stocks even in smaller amounts. There are some investors who want to give up on stocks because they thought that the market is going down and move their money to the bank. Take note that the rates you'll be earning for your savings could be very low.
If you think that it is better than a big loss then try investing not the risky and expensive stocks. You still have a good chance of earning little by little if you diversify your stocks compared to the interest that will come from your savings that you had placed in a bank account. You could still set a specific amount of money in your savings account in a bank where it is regulated by the Federal Deposit Insurance Corporation (FDIC).
Search for investments that have risk levels that will match yours and diversify them. Diversification doesn't protect any investor from their losses but it can help minimize them. You need to have investments that have different risks so that when some of them may go down, the rest could go up.
Read about up-to-date investment blogs and news. You may emulate the old-fashioned ways and principles of investing or make it as your guide.
Save for your retirement plan. If you want a reasonable amount for your retirement needs in the future, then you need to know how much money you'll need when you retire. Look for well-established online programs in figuring out how much you'll need to save for retirement.
If you want a financial planner, take into account the ones who will offer "a fee-only" session. Look for a professional planner who will charge by the hour and not by commission.
Have a good asset allocation plan. Estimate and determine how much of your money that you need to save and invest. After doing it then it is time to figure out how much money you want to split between stocks, market securities or bonds.
This is a good thing to do especially if you have 15 to 25 years before retirement since you still have enough time to make up for losses. For example, if your good in investing stocks then you could opt to have 60% or more of your investments.
Tips & Warnings:
Maximize your savings. Calculate your monthly expenses and check whether you can raise the amount you contribute to your 401(k). Make sure that you're maximizing any applicable employer match.
When you're rebuilding your investment portfolio, be patient and optimistic and allow your money to grow little by little overtime.
Avoid feeling so depressed by your poorly-chosen investments that you had in the past and try not to focus too much attention whenever there is a stock market decline because it may only weaken you mentally and physically