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How to manage your investment portfolio like a pro

Managing an investment portfolio is often considered an equivalent of managing a business. Though

professional advice is always helpful, payments of professional investment management increase costs of

investment and thus, cannot guarantee higher returns. It is the investor who can understand their own

personal priorities and manage the investment portfolio better than anyone else. Following some key

principles and steps, beginner investors can build and manage an investment portfolio from scratch and

ensure return maximization without the help of any paid professionals. 

Ways to Help Improve Your Portfolio Holdings

The successful management of the portfolio holding requires knowledge, proper planning, a proactive

approach, and disciplines. By following a few consistent principles, the investor can improve the returns and

reduce the risk of the portfolio holdings. 

Setting up investment philosophy:

To protect the portfolio holding from emotional biases, the investor should set up an investment philosophy

based on personal beliefs about the stock market, market performance expectation, return requirements, and

risk preference. In this case, the investor can set up the philosophy regarding whether to be a long-term

investor or a short-term trader. A written Investment Policy Statement (IPS) can be very helpful in setting the

philosophies and making a plan for investment activities. 

Understanding the portfolio:

The investor should invest only in the assets that the investor can adequately understand. It is necessary to

understand the nature and performance of the assets to analyze the market condition and make proper

decisions. The P2P platforms are great sources of information and resources to learn about different

investment classes so that the investor can choose the most preferable assets for the portfolio holding. 

Choosing investments based on risk preferences:

Different investment assets have different levels of risks and returns. The investor should select the asset

classes based on personal preference on risks and returns such as risk-averse, risk-neutral, and risk-seeking

characteristics of the investor. For example, if the investor is risk-averse, it would be effective for portfolio

management to choose P2P investments at lower risks and stable returns. 

Diversification of the portfolio:

Diversification is the key to control the risk of investment because it allocates risks and returns to all assets in

the portfolio holding. Henceforth, the investor should spread the risk by selecting different asset classes

across sectors, industries, companies, and locations. This way, the loss from one asset can be offset from the

gain from other assets and thus, reduce the overall risk of the portfolio holdings. 

Performing research before investing:

The investor needs to analyze the securities properly before buying them to ensure finding the best

investment opportunities. In this case, the investor should analyze and find out the undervalued stocks and

securities for higher return investments. 

Rebalancing the portfolio regularly:

With the changes in the market conditions, the selected asset allocation becomes outdated. For this, the

investor needs to rebalance the portfolio by buying new shares or selling existing shares when the market

goes up or down to restore the initial value of the portfolio. 

P2P portfolio

Peer-to-peer lending, or in short P2P lending, is also known as the crowdlending method under which

creditworthy companies can directly borrow from individuals. Thus, P2P lending has become a popular

investment opportunity for investors to ensure value optimization of their portfolio holdings. P2P lending

provides high returns that increase the overall portfolio value. Moreover, the financial institution facilitating

the P2P platform may ensure that all lenders under that platform are creditworthy by providing credit analysis

and ratings to reduce the risks. Since low-risk investment alternatives like bonds and savings accounts cannot

provide an attractive return, by adding P2P lending into an investment portfolio, the investor can allocate

a part of the investment for a higher return at higher risk. Thus, the investor would be able to maximize the

portfolio return by using P2P lending. 

Lendo, for instance, understands the differences in investment needs and expectations of different investors.

Hence, Lendo is the first financial institution to introduce a peer-to-peer (P2P) invoice financing platform in

KSA offering different investment opportunities with returns of up to 24% per year along with invoice

financing for small and medium-sized enterprises (SMEs). More information about Lendo and its services

is available on the website here. 

To improve portfolio holding and managing the portfolio like the professionals, the investors need to grab the

best investment opportunities. Therefore, beginner investors should carefully analyze all investment

opportunities available in the market and make investment decisions based on personal risk-return

preferences and potentially of the investment opportunity in increasing the value of the portfolio holding.

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