Equity portfolio strategy
Having read articles n exchanging experience, I believe the ‘solution’ is dependent on the following factors:
1. Age. The younger, the higher the risk appetite.
2. Capital base. Usually smaller at onset. Key is to start young and allow compounding to take effect.
3. Portfolio concentration vs diversification. There’s merits in both approach, depending on circumstances
4. Experience/knowledge. This can be built via reading, attending seminars, having investment groups, experimenting (trying out different tactics).
As with younger age and smaller capital base, growth strategy should be preferred via:
- Portfolio concentration (or limited stock holdings < 5)
- Selecting small to mid cap companies - fulfilling blue ocean (like Amazon, Netflix, Alibaba in their early days), undervalued companies (Low P/NTA, Low PEG) etc.
- In-depth studies in financials/prospects.
While building the upside, be mindful of the downside risks. This should be complemented with regular savings to grow the portfolio.
Over time, the concentrated approach can grow the portfolio to a reasonable size, whereby consideration should be made to ‘diversify’....perhaps from 5 to 15 and may encompass a mixture of growth and income stocks. Eventually, a portfolio with stable passive income to provide avenue for active retirement, depending on the preferred lifestyle.
1. Age. The younger, the higher the risk appetite.
2. Capital base. Usually smaller at onset. Key is to start young and allow compounding to take effect.
3. Portfolio concentration vs diversification. There’s merits in both approach, depending on circumstances
4. Experience/knowledge. This can be built via reading, attending seminars, having investment groups, experimenting (trying out different tactics).
As with younger age and smaller capital base, growth strategy should be preferred via:
- Portfolio concentration (or limited stock holdings < 5)
- Selecting small to mid cap companies - fulfilling blue ocean (like Amazon, Netflix, Alibaba in their early days), undervalued companies (Low P/NTA, Low PEG) etc.
- In-depth studies in financials/prospects.
While building the upside, be mindful of the downside risks. This should be complemented with regular savings to grow the portfolio.
Over time, the concentrated approach can grow the portfolio to a reasonable size, whereby consideration should be made to ‘diversify’....perhaps from 5 to 15 and may encompass a mixture of growth and income stocks. Eventually, a portfolio with stable passive income to provide avenue for active retirement, depending on the preferred lifestyle.
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