Work towards creating a balanced financial portfolio- Do’s and Dont’s

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Work towards creating a balanced financial portfolio- Do’s and Dont’s

Work towards creating a balanced financial portfolio- Do’s and Dont’s

Work towards creating a balanced financial portfolio- Do’s and Dont’s

In a layman’s vocabulary a portfolio is a group of assets that one diversifies his wealth into. Now a portfolio can include anything from a stock, cash or shares to a piece of art or real estate. The diversity of these inclusions varies from person to person depending upon various factors.

Some might prioritize returns and take huge risks while others would want to be secure at the cost of returns. Whereas for some it’s just a way of organizing their funds. Accordingly, the task of managing these financial portfolios is handed over to either financial institutions or managers. Sometimes people prefer managing it themselves.

Whoever is in charge of the portfolio, all the efforts aim to achieve a balanced proposition of risk and return. A balanced financial portfolio should therefore be an ideal combination of assets that not only assure higher returns but also ensure certain stability.

Before starting to build the portfolio one has to be really sure with their short term as well as long term financial goals as these would form the basis of decision making while including the various assets classes into the portfolio.


  • Ascertain the exact worth of your assets and liabilities to arrive at the accurate net worth.
  • Once this is done, focus on regularly paying off any big time debts that you owe at the earliest. With a liability on head no profit can reward you.
  • Risk tolerance capabilities of the investors should be kept in mind while choosing the asset class. Volatile asset class cannot be included in the portfolio of an investor having a conservative risk taking approach. Similarly, a stable asset class with sure but low returns cannot satisfy an investor with aggressive risk taking approach. Not always does an undesirable level of risk surprise you with good fortunes.
  • An emergency reserve for a minimum period to sail through any sort of contingency should always be an essential component of an efficient financial portfolio. This will not only save your portfolio from being liquidated prematurely during emergencies but also will save you the horror of facing the crunch unequipped.
  • Make provisions for all that’s close in proximity to occur like educational expenses of the kids, personal development expenses etc.


  • Diversification ends in good results only when it is done the appropriate way. An extremely widespread portfolio not necessarily always prove to be a good asset mix. There are chances of the portfolio getting too diluted without the correct investment choice. The appropriate mix of liquid assets, fixed assets and growth assets needs to be diligently arrived at to avoid the aforesaid situation.
  • Never expect change to occur immediately. It’s a process and one needs to be patient while the portfolio could stand up on its own benefit you after you build it.
  • Always plan in a way that’s more tax efficient and you don’t end up paying more than what’s worth. Choose wisely so as to utilize the available tax breaks to the maximum benefit.
  • Do not over watch the portfolio and make unnecessary changes going by every little news that changes the market forces. Rather leaving the portfolio on its own would let it stay focused on its long term goals for which it had come into existence. Frequent changes in the portfolio would lead it nowhere.

It’s very significant to zero in on the perfect convener for your funds as the growth of the portfolio just doesn’t end at shaping it up. The challenge lies in nurturing it the right way while the fiscal factors keep changing the economic scenario on the global platform so frequently.