How to Manage Your Portfolio Like a Professional?

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How to Manage Your Portfolio Like a Professional?

 How to Manage Your Portfolio Like a Professional?
  • 22nd Jul 2022 |
  • 2,609

With increasing inflation, the value of your savings decreases in future. So investing is not an option but a necessity in today’s world. Investment is an effective measure to put your money to work and secure your future financially. However, people often refrain from investing due to the risk involved and market volatility. This is where portfolio management comes into play. One of the critical components of a successful portfolio is risk management. Assessing the risk enables you to invest wisely and minimizing the risk while yielding higher returns.

Here is how to manage your portfolio like a professional!

What is Portfolio Management?

Portfolio management is the art of investing in different investment tools in the right proportion. Investing in different assets makes the risk diversified, thereby increasing the returns. The portfolio collects financial assets like stocks, bonds, derivatives, cash, commodities, insurance, and cash equivalents, including Exchange-Traded Funds (ETFs) and closed-end funds owned by an investor.

Managing a portfolio helps to guide the investor in selecting the best available alternative that will provide the expected rate of return for any given degree of risk. It is a strategic decision addressed by investors or portfolio managers. For example, in market-linked insurance policies such as Unit-linked Insurance Plans (ULIP) or Systematic Investment Plans (SIP), the risk involved in investing is minimized by creating a diversified portfolio. Equity-based funds involve high risk while debt-based investing is suitable for those with low risk-taking appetites. This enables the investor to invest flexibly according to their preferences.

What is the importance of a portfolio?

  • A portfolio provides an effective investment plan according to your income, budget and risk-taking appetite. Hence, it gives you a suitable and unique investment policy.
  • Portfolio management minimizes the risk as the investment is made in different assets with different attributes. So, even if your investment suffers a loss in one sector, the risk is balanced by other assets, further maximizing the returns.
  • Portfolio management makes it easier to track the performance of your investment. The customization of assets and continuous updates of portfolios give you transparency and a complete understanding of how and where you should invest your money.

How to Manage Your Portfolio?

Now that you have understood the importance of portfolio management, you can build an investment portfolio customized. Professionals often regulate and maintain portfolios, but you can also manage your portfolio. So, how to manage your portfolio like a professional?

These are the main objectives one has to keep in mind while creating a portfolio:

  • Maximize the growth of capital
  • Security of the invested amount
  • Enhance liquidity
  • Tax planning
  • Diversify the risk
  • Increase the marketability of securities that you have invested in

Portfolio management is not a one-time process, so you can make the necessary changes and update your portfolio. However, here are some points that you have to consider while managing a portfolio:

1. A portfolio should be goal-focused

Your vision of goals should be clear. You should know for how long and how much you can afford to invest. Prepare your portfolio according to your financial goals and budget.

2. Keep long- and short-term portfolios separate

Long-term investments refer to those that allow you to meet goals after several years or even decades in the future. Short-term investments are designed for goals closer at hand and provide returns in a shorter period. So, considering your goals, you should have an appropriate mix of long- & short-term investments as the expectations and returns are different in both investments.

3. Diversify your portfolio

Do not put all of your eggs in one basket. If you invest all your money in one plan and that goes down, your portfolio would be doomed. So, you must diversify your portfolio by investing in various assets like equities, mutual funds, Gold, bank deposits, life insurance etc. Also, you need to diversify among debt and equity in MF and multiple industries like infrastructure, IT, banking, cement, pharma, etc.

Insurance can be one of the assets you should not treat less in your portfolio. You can save taxes, protect your loved ones, secure their financial independence, and so on. Other life insurance policies like ULIP will help you earn market-linked returns and a part of it can be a life cover.

4. Keep a regular track of your portfolio

Markets go up and down all the time, and your asset allocation will passively do its job protecting and growing your money with no hand-holding required. One thing that you need to do is check it regularly, half-yearly or at regular relevant intervals. (Note: Remember that intervals should not be too long or too short)

5. Rebalancing the portfolio

Keep yourself updated with the performance of your portfolio. If the assets have deviated from your target percentages, it’s time to rebalance. You can rebalance the portfolio in one of two ways:

1.You can invest the money you have saved throughout the year to purchase new shares or assets.

2. You can even sell shares of the funds that did very well to purchase more shares of the funds that did not.

Portfolio management is an essential skill to manage your investment beneficially. You can customize your portfolio according to your unique requirements and financial goals. Design a portfolio such that it minimizes risk and maximizes return. Keep a regular track of your portfolio and rebalance it if required.

Kotak e-Invest

In this policy, the investment risk in the investment portfolio is borne by the policyholder.


  • Return of Mortality Charges*$
  • Enhanced Protection
  • Multiple Plan Options
  • Zero Premium Allocation Charges
  • Tax Savings^

Ref. No. KLI/22-23/E-BB/521


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