How can you build a diverse securities portfolio that aligns with your investment goals?

Below things should be considered as well. Age is a vital factor that governs the risk profile of an investor. If you are a young professional with minimal responsibilities and long investment duration, you can think of putting more money in riskier investments. However, this might not be suitable if you have family dependents like parents, wife, and children. In such a case, you may want to look at investments catering to both, return as well as protection. Financial responsibilities such as your children's education and marriage and your current financial situation will remain vital in deciding your risk-taking ability. If you have enough funds to meet your short-term goals, you can expose your portfolio to high-risk investments.

In order to determine the right decision on the investment profile one needs to assess their position in life. Are they just starting out, peak of career, maturity stage or decline stage. An understanding of where they are is critical when determining how much risk one can take and the type of assets to invest in.

I agree with the article, but I think it’s also important for the investor to recognize how he is approaching his investments, is he an investor or a speculator? If he is investing, he may buy securities based on the companies’ fundamentals and usually have a long term perspective. If he is just speculating, he might use chart analysis and operate based on short-term price momentum, not much on business fundamentals. I personally believe that being an investor is better than being a speculator, but it’s just a matter of investing profile.

To construct a diverse securities portfolio, start by understanding your investment goals and risk tolerance. Break down your objectives into short-term and long-term milestones. Research various asset classes like equities, bonds, real estate, and commodities. Allocate assets in a way that balances risk and potential returns. Diversifying across sectors, geographies, and investment instruments can mitigate potential losses. Regularly review and adjust your portfolio in response to market conditions and personal changes. Finally, consider consulting a financial advisor to ensure your choices align with your financial roadmap, maximizing growth and safeguarding your investments.

I believe it starts with an emotional checkup and an unwavering commitment to the predetermined goals and objectives. It is important to separate emotional ties to money and financial market performance both during increasing and decreasing markets. This is imperative to know before any allocation is constructed.

Investors need to first ensure diversity to be robust across different economic regimes: Global Equities for bull markets, Global Bonds for non-inflationary bear markets and Commodities/low correlation alternatives like managed futures or global macro for inflationary regimes (and bear markets). We then need to find portfolio balance by ensuring asset class weights contribute similar risk to the portfolio. Finally, you need to assess your personal risk tolerance. Historically this has meant dialing equities up and down which is sub-optimal. Today with the advent of Return Stacking, investors can expand total portfolio gross exposure pro-rata, not sacrificing diversification, while expanding their required risk and commensurate returns.

Asset Allocation is one of the critical things which helps your portfolio grow as per expected rate of Return. To meet the goals if the expected rate of return is around 20 percent and your risk appetite is low it becomes difficult to manage the risk and return. In such scenarios portfolio hedging plays a important role. Investor is risk averse as he does not like volatility. Volatility can be reduced by Buying Put options as a hedge in case value of portfolio comes down. Having a hedge also ensures that one can now go for higher percentage of Risky investments. Financial advisors can Derivatives effectively to see that the investment goals of the investor is met with limited resources he has.

Building a diverse securities portfolio that aligns with your investment goals necessitates astute asset allocation, a strategy that is sensitive to market timing. In rising markets, it's prudent to consider assets like equities and growth stocks. These assets tend to appreciate during bullish phases, offering the potential for substantial gains. Conversely, in falling markets, allocating towards defensive assets such as bonds or dividend-yielding stocks can provide stability and income when capital preservation is paramount. The rationale behind this approach is to seize opportunities during market upswings while safeguarding capital during downturns, ensuring your portfolio's alignment with your long-term investment objectives.