Filed on September 13, 2020 | Last updated on September 15, 2020 at 07.36 am
Want to get a good shot at clocking healthy long-run gains? Then control risks by diversifying your investment portfolio with guidance from Standard Chartered's team of experienced wealth specialists
Reducing a portfolio's risk without tapering your expected returns is possibly the only free lunch in financial investment. Termed diversification, this idea of spreading money across different spectrums of investments is a crucial way of establishing an investing strategy that tempers potential losses in a bear market. Simply put, you should never plunk all your eggs or investments in one single basket or market. To achieve a diversified portfolio, you must look for assets that have low or negative market parallels, so that if one moves down, the other is able to counteract the loss. However, while many investors think they comprehend diversification, they often fall prey to myths that keep them from fully savouring the free lunch. It is here that Standard Chartered Bank steps in.
It offers comprehensive wealth solutions to suit your needs like their open architecture mutual funds platform offering funds across several asset classes - from bonds and equities, to commodities - and in different currencies. Their Wealth specialists help you diversify your investment portfolio to seal a financially healthy and secure future for you.
The concept of diversification should primarily depend on your lifestyle. Unfortunately, however, it often doesn't, which therefore exposes you to greater financial risks, insecurity, and poor fiscal growth. There is a need, therefore, to break out of the vicious cycle of not understanding how your financial environment might affect you, how you could better control your cash instead of being controlled by it, how you may become a more rational investor, more successful saver, less impulsive buyer, and recognise unhealthy patterns, including addictive consumptions and problem debts.
Here are a few fundamental steps to watch out for before you go on a treasure hunt of securing a bankable diversified investment portfolio:
1. Identify your financial personality
Understanding your financial personality could literally save your money, help reduce wealth anxiety, overcome an obsession with your investment portfolio, and stop you from overcompensating your lack of control in funds. So, which of these archetypical financial personalities do you belong to?
. The comfortable investor: Are you composed, confident, and believe in controlling your financial comfortability? Do you avoid being impulsive and speculative? If you focus on long-term returns and make decisions based on logic rather than emotions, you are a comfortable investor. You are well-informed on how investments work and are happy to take steps towards making your financial decisions with proper guidance. You will of course have some amount of experience with investments, and will prefer to stay calm and make reasonable decisions in turbulent times.
. The conservative investor: Are you a fan of clear investing and decision-making principles? Are you comfortable in your current financial state and internal locus of control? Do you believe that success lies in hard work rather than luck? If yes, you are a conservative investor, ranking pretty much low on not just speculation and impulsivity, but also on confidence and composure. You prefer making your own personal decisions on wealth management without much of a desire for guidance. With a relatively high experience in making investments, you are less likely to invest in volatile portfolios.
. The enthusiastic investor: Do you prefer to set aside a portion of your wealth to satisfy your impulse for speculative investments without jeopardising your entire wealth because you, literally, live for the thrill? If so, you are an enthusiastic investor. You make impulsive decisions based on emotions and are less likely to believe that you could control your destiny and luck. While you do seek professional guidance and consult wealth management experts, you also share a certain level of anxiety combined with fluctuating moods in your investment journey. With moderate composure, you are perhaps the most common archetype in our society.
2. Understand your archetype
Whether you think you are an easy-going investor or a stern one, there are many financial products available in the market to leave us spoiled for choice. But we often make the mistake of investing in one type in order to avoid risks, which evidently leads to high risks of loss during market fluctuations.
Understanding your attitude towards investments, how you make decisions, how you could potentially improve your investments, including your existing portfolio, is the key towards making confident investment decisions, securing strong financial portfolios, and growing your funds for a stable future.
These insights can help investors and Wealth Specialists achieve better investment outcomes, by recognising patterns in their decision-making and understanding their own limitations effectively translating these into practical advantages.
3. Seek professional guidance
Some of us need a light push, while others want someone to hold our hand throughout our investment journey. Whatever your need, Standard Chartered's investment approach is based on beating cognitive biases, thereby helping clients like you recognise what can compromise your ability to make objective decisions, especially during market volatility such as the current COVID-19 scenario.
Remember, you can't build a decent portfolio solely out of a mishmash of heavily peddled stocks. Instead, to have successful long-run gains, you have to find smart ways to control risk. And one of them is diversifying across a broad array of investment portfolios. Standard Chartered caters to diversified investments with decades-long portfolio expertise, thereby delivering a more personalised asset experience, choice of investment products, portfolio performance, etc.
Guidance from their team of experienced wealth specialists, can assist you with your financial future, especially in times of economic doldrums.