Kavan Choksi: Tips on Improving a Business Portfolio
For most investors who've been around long enough, investing their finances is all about preserving capital in the long term and never about losing money.
Today, Kavan Choksi reviews some strategies for business owners that can help them make the most of and protect their portfolios. Before anything else, it's important to remember that all investment ventures come with risks. That said, being aware of risks is part of maximizing the potential of one's business portfolio.
Tip #1: You'll need non-correlating assets.
According to Kavan Choksi, non-correlating assets refer to multiple stock portfolios such as commodities, bonds, real estate stocks, and currencies. These often eliminate most unsystematic risks while helping compensate for the given systematic risks.
These assets allow for lowered volatility since they react to market changes differently when compared to stocks. In short, non-correlating assets make for more balanced and safer returns.
Tip #2: You'll need to diversify your portfolio.
Anyone who's put together a winning portfolio knows how important diversification can be. In fact, Kavan Choksi has always emphasized that a diverse portfolio will often outperform concentrated ones.
Individuals can gain a larger number of investments in more than a single asset class. This strategy goes well with non-correlating assets as it aids in regulating the unsystematic risk that comes with investing in a single company.
Tip #3: You'll need to look for dividends.
Opting for stocks that pay in dividends is always a great idea, Kavan Choksi points out. Dividends guarantee above-average returns and act as a needed cushion in case markets decline.
Many statistics prove that businesses that pay good dividends tend to earn more rapidly. Typically, the more secure they are, the higher the share prices and capital gains.
Kavan Choksi is a freelance business management consultant. He shares his knowledge of finance, business, and economics on his blogs, which can be found on this page.