Project Management Office

4 Tips for Effective Portfolio Management

Smart, disciplined, and regular investments in a portfolio can bring long-term benefits to an investor.  Usually, investors opt not to invest in stock due to lack of knowledge. However, self-learning can overcome any hurdle and investors learn by investing.

In this article at Yahoo Finance, President of FundX Investment Group, Janet M. Brown narrates how funds allow the investors to manage their money through some of the best money managers and research teams.

Changing Dynamics

However, she further suggests that the investors need to consider potential trading fees and tax consequences and adapt their approach as per the size of their accounts. Here are few tips to manage fund portfolios by FundX President:

  1. The investors must have a clear plan in their head. They must know how to change their fund portfolios, and then figure out a way to execute the plan. It would be even better if they make a note of all the essential points to refer later during the market crisis.
  2. Impressive funds are expensive and usually investors trade funds with a broker. The brokers manage to keep some funds that are handy without a transaction fee, known as ‘No Transaction Fee (NTF) funds’, while others come with a transaction fee. Therefore, before placing a trade, the investors must ensure if the funds have a transaction fee. They must also know how long they’ll need to hold this fund to avoid redemption fees, too.
  3. The investors must be aware of the potential tax penalties of the trade. They are bound to pay taxes on capital gains they get while selling a fund. So, they must keep track of the period for which they held the funds before selling it. Interestingly, even the losses could be used as counter gains and that is why the investors need to keep the benefits in mind while selling the funds at a loss. They need to carefully trade off the funds by the year-end.
  4. Often investors own more than one account and they focus on their large accounts that includes bulk investments. This may lead to neglecting the small ones. You can pick whatever approach suits the size of your account. However, it is advisable to avoid transaction-fee funds, or focus on NTF.

It would be difficult for the investors to own enough funds and diversify their exposure to stock and bond funds. However, the author advices to avoid risk of both stock and bond funds by focusing on core positions. To read more, follow the link below:

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