It is the age of active investors. Traditionally, people used to purchase units of a handful of schemes and stay invested regardless of the performance of the funds. This led to all their eggs being in a handful of baskets or increased risk of loss of capital if one or more of these funds didn’t perform as expected. Also, the market being inherently volatile, has different sectors doing better than the others at certain times. By not monitoring and moving their investments around, these investors also lost the opportunities to earn good returns.
As investors, we exercise a lot of diligence and do extensive research before purchasing units. However, it still does not ensure that our investments perform as expected. If you want your money to work as hard as you do, while you sleep, you need to regularly monitor and manage your investments. This is precisely where a portfolio steps in.
Let’s say that you are an investor with a low risk preference and have Wealth Creation as your financial goal. You approach an investment advisor who helps you build a portfolio by understanding your requirements and aligning the investments accordingly. Once the investments are made, you monitor the performance of your overall portfolio and do minor changes if some elements don’t seem to perform as expected.