How can you maximize your investment returns?
Investments are done to get maximum returns from it. Returns need to be calculated in relation to the risks involved and not in isolation. For a risk of 14%, a return of 16% is considered to be an excellent return. For 30% risk, a return of 16% is not so desirable. In order to create a large portfolio for investment, it is important to save a lot with consistent investment. However if you are looking for ways to improve your returns, then you are in the right place!
Way to maximize your investment returns
There are various ways by which you can maximize your returns on investment and make growth in your upcoming years.
- Start early and invest for a longer period– When you talk of investment, you should calculate the time when you are starting rather than the return that you are getting. If you start early, then you can actually earn double income from the investment. Your returns will be more if you withhold your wealth for longer time frames. Therefore the basic mantra here is- start early and keep your portfolio for a long time.
- Calculate the returns in accordance with the risk adjusted terms-You should always calculate the returns on investment based on the risks that you have taken. You have to clear out a fact- firstly you need to understand that higher returns can mean higher risks but taking higher risks may not yield higher returns. So just because you have taken higher risks doesn’t mean that you will be getting high returns. For example, if you are taking a risk of 14%, a return of 16% is considered to be an excellent return. For 30% risk, a return of 16% is not so desirable.
- Allocating assets by sticking to the rules– Another best method to maximize return is to adopt a comprehensive approach for allocation of assets and rebalancing of portfolios. How can you allocate assets? Here are some ways by which you can do that- i) You will need greater share of equity for long term goals, ii) combination of debt and equity for medium term goals and iii) high share of fluidity for short term goals. As far as rebalancing is concerned, two things needs to be ensured: i) When the investment will leave behind, the profits will automatically be taken out, and ii) You maintain the risks in accordance to your profile standards.
- Continue to make investments irrespective of the market– The market should never affect your contributions to the portfolio. There are two kinds of markets- bull market and the bear market. In case of bull markets, you will get first returns which will be a convincing factor for not contributing to the portfolio in the long run and in case of the bear markets, your contribution is of absolute necessity no matter whatever your market returns are. This contribution will help you to minimize the decline.
All the above factors should be taken into consideration when calculating the returns on investment. Also make your plans keeping in mind the long term benefits on your investment.