How to invest like a Professional Fund Manager

Investments are an available option if one desires financial security. One doesn’t require a prestigious degree or even a graduation to avail this option. One requires just the basic knowledge of the mechanism. He can then start investing as per his capacity. There are several investment options available such as stock, bonds, mutual funds and real estate. All these at its core have the aim of earning more money. They are there to supplement your existing options (income). Investments depend on the willingness to take risks after consideration of all factors.

A typical and safe plan is to make investments from your savings. Due consideration should be given to expenses like the cost of living and the bills. Then one can set aside money to invest. As it is with any new discipline, one must make efforts to understand investments. This amateur research will help one understand the market as per his own acumen.

Setting up a Goal:

Before you begin investing set a goal. Write down your expectations on a piece of paper. This way you will not lose sight or float away in the surges. Keep it as down to earth and as realistic as possible. Base your expectations on facts and conclusions, not conjectures. For example, an investor of 30 or 35 will make investment for capital appreciation. While the same investor about a decade later would think of his retirement. Consider these variables when you asses your ability to take risks.

Investment Strategies:

Like different types of investments, there are even different ways of investing. Most investors invest 70-75% of their funds in low-risk instruments and 15-20% in blue chip equities. On the other hand, some investors invest 80-100% funds in the equity market.

Cost of investment:

Another variable to take into account, is the cost of investment incurred. This cost of investment will affect the return on investment. Taxes on investment returns and commission to the stockbrokers are example of these costs. Similarly in mutual funds, they charge management fee or loading fees. To stay in for the long run, expert counsel is well advised. An investment adviser is an example of such an expert. He will give you investing options suited for your needs. An investment adviser can create a portfolio tailoring all the variables and manage it for you.

Portfolio Diversification:

When it comes to portfolio, diversity is essential and helps minimize the risk. Don’t put all your eggs in one basket. The portfolio should consist of varieties like equities, bonds, treasury bills and mutual funds.

Markets are prone to fluctuations, while being cautious one must not be scared of them. The investor must not let his emotions get the better of him. One can incur losses in percent of returns if one liquidates his investment prematurely. A long-term investor should be able to look beyond the current fluctuation. Review your portfolio and make additions or amendments periodically. Respond to the trends in the market but with in-depth research and with proper conclusions.