Expert Contributor
Required for a Successful Portfolio By Joe Morgan, CFP®, CFA, Principal: Best Financial Life, Resident since 2004
T
o have a successful portfolio, three things are required: Diversification, Risk Management, and Good Behavior.
I’ll dive a bit into the details, but before doing so, let’s get clear on how we define success in a portfolio.
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It is not beating the markets or outperforming our neighbors. Success is when your portfolio makes it possible for you to do all the things you want in life. Your portfolio is nothing without a financial plan for it to support. Period. Turning to the elements of a successful portfolio, diversification is when you hold investments that are not working. By definition, your investments should be doing different things and at times some of them will not look so pretty. That’s ok, as long as they support your growth in other times often enough. Next, risk management is critical as we don’t want to build enough risk in our portfolio to totally destroy our strategy. The markets will provide the return we need over time, if we will only let them.
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Third, our behavior will be the deciding factor over time. Can we stick to our strategy in the down times? Can we maintain a steady hand in the great markets (and not get carried away)? These are difficult and important issues we must face throughout our investing lives. For more detail, go to https://bestfinlife.com/blog and let’s start calibrating your path to clarity! Best Financial Life is a Registered Investment Advisor with the State of California and Joe Morgan is a fiduciary to his clients at all times. If you’d like to ensure your finances are on the right track, schedule a call with Joe at www.calendly.com/bestfinlife.
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