How To Balance Your Portfolio

Running a multinational corporation or even a medium sized company requires the top management to be very proactive and anticipate the future risks to the organisation. Initiating new projects or mere investing in ventures require deep analysis from experts before dumping millions of dollars into it. A portfolio of a company is actually the mix of investments it has made in different projects and sectors. For running a corporation successfully, your selection of portfolio must be such balanced that any adverse changes in the macro or micro environment don’t affect your operations badly.


  • 1

    Before you take steps to balance your company’s portfolio, you first have to analyse the existing portfolio. Examine the spread of your assortment, like looking out how much you have invested in stocks, bonds and any other sort of investment plans.

  • 2

    Calculate the relative percentages of each investment to your total portfolio, for example you have invested 45 per cent in stocks, 25 per cent in bonds and 20 per cent of the total investment amount into other schemes.

  • 3

    You are basically balancing your portfolio due risks associated to your investments. Analyse the degree of risk on every individual investment. Some investments carry great inherent risks, especially if the economic conditions of your country are not stable. In growing economies, you have little risks associated with your portfolio and it is relatively easier to manage it.

  • 4

    Determine the risk appetite of your company. It is actually the level of risk you can bear comfortably without significantly disturbing other operations. Larger corporations have huge risk appetite and likewise, smaller businessmen have limited level of risks to be taken. You have to invest your money according to the risk appetite to play safe.

  • 5

    Never invest in merely one sector. It is one of the most lethal mistakes committed by the investors. Risk mitigation is very much needed for safeguarding your investments and only a diversified portfolio can contain low risks. Suppose you have invested 45 per cent of your portfolio in textile sector. What if a crunch arises in the textile industry due to limited availability of raw materials and it results in downfall of stock values? Your entire 45 percent of portfolio will be in jeopardy. However, if you invested 10 percent in textiles, 15 percent in banking, 10 percent in chemical industry and 10 percent in petroleum sector, your diversified portfolio would have caused lesser damage to your company. Moreover, the loss from one investment could be counter balanced by the profit from another investment.

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