- 1). Allocate portofolio assets properly. To do so, you should be sensitive to changes occurring in the economy and be mindful of the time frame of your investments. For example, if you believe that an economic downtown will take place in the near future that will negatively affect stocks, perhaps selling some of your stocks and putting the proceeds into bond or certificates of deposit is in order. Or you should consider making adjustments to your asset allocation because you are getting older and will have less time to recoup losses than at the time of the assets' purchase.
- 2). Refine your asset mix. If your selection of assets is better than average, you will have a portfolio that is less risky, and over time, it will generate higher returns. Make a review of your portfolio and consider selling those stocks that have been disappointments and replacing them with those that have better prospects based on your strategy. Make it routine to review your portfolio at least yearly.
- 3). Strive to outperform the market each year. For example, if the market in general went down by 15 percent while your holdings lost only 5 percent of their value, your portfolio did well. By the same token, if the market climbed by 10 percent but your investments increased in value by 20 percent, your portfolio also did well in relation to the market as a whole.
- 4). Rid your investment portfolio of underperforming assets. A valid strategy is to analyze your portfolio and sell the stock that has the worst performance during the past 12 months, and purchase shares of a company in the same industry that has a promising future.
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