How Can Effective Portfolio Management Help Grow Your Investments?
23 January 2025
5 Mins Read

toc impalement
Apparently, everyone wants to invest in some asset class! Well, everyone should be successful – but when you do it wrong, as a portfolio manager, it physically hurts! Certain art and science behind investment are refined with portfolio management.
Everyone who starts investing does so intending to grow their money over time. Doing so isn’t easy, but following these portfolio management tips will help you to stay on track. Don’t leave your portfolio management too late, as it’s something that you need to bear in mind from the very start of your investing journey.
The following article will help you understand why you need the assistance of a portfolio manager and how you can improve your investments. All of which come from tried and tested methods.
What is Portfolio Management?
Portfolio management is selecting and overseeing a group of investments that meet your or your client’s goals. As a portfolio manager, you oversee and monitor their investment in different asset classes and monitoring them.
Whether you are a newbie or a seasoned investor, you will need the help of portfolio managers to oversee your investments. Portfolio managers, with the help of their in-depth understanding of the key elements and asset allocation, among others, can successfully help you.
There are two main types of portfolio management:
- Active portfolio management
- Passive portfolio management
Active portfolio management requires strategically buying and selling stocks and other assets that help beat target market performance. On the other hand, passive PM matches the market’s returns by mimicking the makeup of indexes/an index.
How Does Portfolio Management Help You Grow?
Now that you know the basics of portfolio management, here’s how you can use it effectively to grow your investments:
Keep costs as low as possible.
Management fees, commissions, and other recurring costs will eat your profits if you don’t take great care of them from day one. Even a relatively modest fee at first can become a significant problem as the amount builds up monthly or yearly over a long period.
Getting investments that are completely free of cost isn’t always possible. However, you should look to understand the fees at the very start.
Rather than focusing solely on the rate of return, look at a simulation that will tell you exactly how much you can hope to earn over a certain period. By considering the costs at the beginning, you’ll go into the investment with your eyes wide open. This will help you fully understanding how much it will be worth.
Don’t forget that an investment with a higher cost basis may be better for you than one with less, but you won’t know for certain until you’ve crunched the numbers.
Diversify to lower risk.
Growing an investment isn’t as easy as some people would have you believe. With options such as the stock market, bonds, commodities, and cryptocurrencies, there are now more choices within our reach than ever.
This is good news, but it also means that you must spend more time investigating your possible options.
Diversifying is typically seen as a way of lowering the risk level. It means that you aren’t limiting your options to one. In terms of growing your investment, a good level of diversification can be useful.
It allows you to benefit from different market conditions and may provide a more stable growth pattern.
As explained by Investopedia, diversifying is helpful because it gives you exposure to different financial instruments, categories, and industries.
Consider Risk Tolerance and Timescales
Each type of investment you consider brings a certain level of risk. From highly volatile cryptos to the relative safety of bonds and gold. Therefore, one of your first steps should be considering the level of risk you’re comfortable with as you look to grow.
For example, you might put something like 80% into an investment with stable growth potential. And the other 20% into something riskier with more potential upside.
However, if you have a higher risk appetite, you could consider a different mixture of investments to give you more chance of a big win.
The timescales you plan to hold your investment for is another crucial aspect. If you’re looking to hold on to an investment for many years, the process for choosing it isn’t different from something with a shorter-term outlook.
If you require access to your funds shortly, consider this at the start to avoid any nasty surprises later.
Locking away some funds for longer while keeping others more readily accessible is generally a good idea, though each case is different.
If you’re saving to buy your first home, you’ll want to make sure that the funds are available when you need them, while saving for retirement gives you a longer outlook.
Follow the Experts
Carrying out your research is one of the most important pieces of investment advice. You’ll find a wealth of online information that helps you understand which investments might suit you well.
As a first step, discovering the pros and cons of different options is a great start. This lets you see some reasons for choosing one type or avoiding another.
After doing this, you might want to look at what the experts are saying. As this can help you to interpret the data and look for future trends.
Don’t restrict your financial education to a single site or opinion when there is so much data to be assessed. If we look at an investment firm such as the StepStone Group, we can see that it relies on experts such as John Avirett.
With a focus on venture capital investing, Avirett is the kind of financial expert whose opinions are worth listening to. Regardless of what kind of investment you want to make.
Avirett shares his thoughts on Medium, you can read about venture capitalist’s challenges and opportunities. This will help you get a better idea of the overall market.
By considering each of these points, you can start investing in a way that works for you! In addition, look forward to the satisfaction of seeing your portfolio grow over time.
Hire a Portfolio Manager!
When you want to dabble in stock market investment or other asset classes, it seems enticing to rely on experts. You should always opt for the services of an expert who can help you with portfolio management with their vast knowledge.
The article lists all the ways this particular art of investment management can help you improve your investments. You can also get the most out of investments by improving your research and knowing much more!
READ MORE: