Any investor who would like to diversify their money on multiple investments should have stock market investments in their portfolio. This is important because stock market investment is one of the greatest avenues for generating income from other sources. For those who are already having a full-time job, working on a part-time job and earning some money may not be a possibility. They will either not have time for it or they might burn out. Having their investments in stocks and cryptocurrencies is a good way of looking for income from other sources.
When we have stocks, it is important to review the portfolio regularly. This is to make sure we are not missing any investment and at the same time, we are not investing in any stocks that are hitting the bottom. I have had this lesson learned the hard way. I have been investing in the stock market for close to 10 years now. I have spent a lot of time in the past understanding how it works and was able to make some decent investments and get some decent returns from it. That is where I learned about the importance of getting rid of underperforming stocks in our portfolio.
Reviewing the portfolio regularly
Having good stocks in our portfolio is a good thing but at the same time, we have to also be sure that we should get rid of the stocks that are not performing very well. We might sometimes be very sensitive about those stocks but we have to be also sure that we are making some decent profits from our investments. Reviewing our portfolio regularly helps in doing this analysis. Sometimes it can be hard to decide which stock is good and which is not. Most likely people do some technical analysis to understand what stocks work well and what would not work even in the long term.
Mostly my investment is only long-term term and I try to hold my stocks to see definite profit from it. However, reviewing the portfolio regularly will help us understand the good and bad times of the market. In 10 years if there are 5 good and bad times, we get 5 opportunities to sell and buy again. This is how investors see profit. I understand that if we invest 10 years back and see the value now, it would be higher if the stock is really good. But we would have missed 5 opportunities to trade in-between to sell and buy again. Sometimes it is also risky when we sell low and the stock goes up high but reviewing the portfolio regularly helps in making use of such opportunities and book our profits accordingly.
Does this strategy work in crypto?
I wouldn't say that this strategy can work well in crypto. In cryptocurrencies, nobody can predict the price of a crypto unless it is Bitcoin. It appears that for Bitcoin it is always the upward trend but for all other coins the possibility of the upward trend is unpredictable and doesn't mean that it won't happen but it will happen.
From what I learned in crypto, it is always better to earn cryptocurrencies than buy with our own money. There are many avenues available where we can spend our time and earn cryptocurrencies. That is the best thing and I believe getting rid of underperforming cryptocurrencies may not be a great idea because it is hard to predict when will be the good time and when will be the bad time. Some of the cryptocurrencies have been stagnant for several years now. But people keep saying that it is just a sleeping giant.
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