The last video in our series on the Principles of Successful Investing focuses on What to Consider When Building a Portfolio. This builds on prior posts on the difficulty of timing the market, how to think about investment risk, and how to build confidence as an investor.
In the video below, Ken French discusses how, when building your portfolio, do so in comparison to the global market portfolio that is held by all investors. In general, your portfolio should differ from the market because you're different than the average investor. If you're more risk averse than the average investor, you might consider adding more bonds to your portfolio. Conversely, if you are more aggressive than the average and can bear downside risk, you may consider adding more stocks to your portfolio.
In the video below, Mr. French explains:
"Lots of research suggests that after costs, few of us have enough of an advantage over the combined wisdom of all other investors to systematically make a profit."
While you may think you're better at identifying overvalued and undervalued assets, when compared to all average investors lumped together, it is too difficult to do on a consistent basis. Develop a portfolio that is well diversified, exhibits low turnover, low internal cost, and suits you and your goals rather than merely matching, or attempting to outperform, the average investor.
We hope these videos have helped you navigate the ever changing market environment.
-EnRich Financial Partners LLC
Investment Advisory Services offered through EnRich Financial Partners LLC, a Registered Investment Advisor.
Investing in stocks always involves risk and there can be no assurances that these options will produce positive results. Consult your financial and tax advisor on these subjects. This material may contain forward or backward-looking statements regarding intent, beliefs regarding current or past expectations. Such forward-looking statements are not a guarantee of future performance, involve risks and uncertainties, and actual results may differ materially from those statements as a result of various factors. The views expressed are also subject to change based on market and other conditions. Furthermore, the opinions expressed do not constitute specific investment advice or recommendations by EnRich Financial Partners. Past performance is not a guarantee of future results. This content is provided for informational purposes and is not to be construed as specific investment advice.