How to Use Tech to Achieve a Balanced Portfolio

Your investment portfolio is one of your most important financial assets. Depending on your goals and where you are in your career development, it could be a nest egg you’re planning to use to buy a house, a hedge against the volatility of your career field, or the foundation of your early retirement.

But if you want to get the most out of your portfolio, while minimizing risk, you’ll need to balance your investments. Fortunately, there are many innovative tech tools that can help you tell if your portfolio is adequately “balanced” – and go through the steps of balancing it.

The 7 Hallmarks of a Balanced Portfolio

Let’s start by defining what a balanced portfolio is. What do you need to achieve to accomplish this?

1. Defined goals. First, you need to have some defined goals in place. What are you trying to achieve with your investment strategy and what kind of risk tolerance do you have? For example, do you want an aggressive portfolio that’s capable of seeing an explosive rate of growth? Or is it more important for you to have a steady stream of revenue generated by your assets? How do you want your investment profile to change over time? Every portfolio should look different, based on the personal goals and preferences of the person holding it. Unfortunately, tech can only help you so much here – you’ll have to do some thinking and planning on your own.

2. Different types of assets. A balanced portfolio needs to include assets from a mix of different classes. For example, you can hire a property management firm and invest in real estate directly, while also investing in stocks, bonds, and even alternative investments. If you’re only invested in one asset, you’ll be facing unnecessary risk. The best brokerage apps available to consumers allow you to invest in a wide range of different assets, all with just a few clicks or taps.

3. Complementary investments. Some assets have a tendency to perform in an inverse relationship with another asset. For example, as stocks go down, the value of precious metals tends to go up. If you want your portfolio to be completely balanced, you should include at least some pairs of complementary assets – not enough to totally cancel each other out, but enough to hedge your bets. It’s hard to visualize this without the proper tech tools to lay things out in an intuitive format.

4. Allocation into different risk categories. Different assets and different individual choices come with different levels of risk. Low-risk plays, like bonds, tend to have lower returns. Stocks in emerging markets have potential for explosive growth, but also come with higher risk. Good brokerage apps will help you include a variety of different risk levels across your holdings by giving you more transparent risk information – and potentially alerting you when it’s time to rebalance here.

5. Exposure to different industries. Most balanced portfolios should have at least some exposure to the stock market. But if you’re going to invest in stocks, you should also make sure you’ve diversified in terms of the industries you’re in. If you’re overexposed to one industry, like tech or energy, it could hit you hard if that sector takes a hit. ETFs are a great way to get exposure to many industries and companies at once.

6. Exposure to different areas. Different geographic areas tend to experience different economic cycles, so it pays to get exposure to different areas. For example, you can hold real estate in many different cities, or even different countries. And you can invest in stocks and bonds from many different countries around the world. Thanks to the global reach of the internet, you can invest remotely in areas all over the world.

7. Frequent rebalancing. Balancing your portfolio isn’t an action you take once. It’s something you have to do on a regular basis. Make it a point to reevaluate your goals and changing risk tolerance, and reallocate your investments as necessary at least once a year. It’s much easier when you have fun, simple apps to make the experience streamlined.

How to Use Technology to Balance Your Portfolio

These are some of the best tech tools to help you balance your portfolio:

· An intuitive brokerage app. One of the best assets you can have is an intuitive brokerage app. Good brokers give their investors a wide range of different tools, including tools for research, access to markets in different industries all over the world, and an intuitive interface that makes it easy to carry out your vision.

· Social newsfeeds and groups. It also pays to stay connected to many different social newsfeeds and groups. If you’re subscribed to the latest news in a variety of different industries and locations, you’ll be alerted when there are new investing opportunities – and when your level of risk changes unexpectedly.

· Automatic reminders. Using any number of tech tools, you can also set up automatic reminders to carry out your investing goals. For example, you can set alerts to notify you when three months have elapsed, so you can reevaluate your goals and progress.

Balanced portfolios are going to look a little different depending on who’s doing the balancing and why they’re balancing. But they do tend to share a lot in common. Invest in the best possible tech tools you can afford for your investing strategy and don’t be afraid to change up your approach when necessary – as long as you’re sticking to your long-term vision.

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