Why You Must ‘Know What You Own’ as an Investor

When it comes to your investments, knowledge is power. The more you know about what you’re invested in and why, the better decisions you’ll be able to make about your portfolio. That’s why it’s so important for investors to stay on top of their portfolios and practice ‘knowing what you own.’

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Reasons to know your investments

1. Ensure you’re achieving your desired rate of return.

Investors should always have a target rate of return in mind when building their portfolios. 

By knowing which investments are in your portfolio and what their returns have been historically, you can get a better idea of whether you’re on track to reach your goals or if you need to make some adjustments.

2. Make sure that you’re not taking on more risk than you’re comfortable with.

Investors should always be aware of the risk-return profile of each investment in their portfolios. 

By knowing which investments are high, medium, or low risk, you can make sure that your portfolio is balanced and that you’re not taking on too much risk with any one investment.

3. Stay ahead of changes in the market or economy.

The world of investing is constantly changing, and it’s important for investors to stay ahead of the curve. 

By knowing what investments are in your portfolio, you’ll be better equipped to deal with any sudden changes in the market or economy.

4. Keep tabs on your asset allocation and rebalancing schedule.

One of the biggest challenges for investors is staying on top of their asset allocations. 

By properly understanding your asset allocation, you can make sure that you’re rebalancing your portfolio as needed and not taking on too much risk in any one area.

5. Identify potential problem areas before they become too serious.

Investors should always be on the lookout for any potential problem areas in their portfolios. 

By knowing what investments are in your portfolio, you can catch any red flags before they become too serious.

Tracking your alternative investments

The world of alternative investments is constantly evolving, and investors need to stay on top of the latest trends and developments if they want to maintain their success over the long term. 

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Alternative investments include a wide range of assets, such as hedge funds, venture capital funds, private equity, real estate, and commodities. 

Alternative investments may require more active participation from investors than traditional stock market investments, where investors can sit back and watch their portfolio compound. 

However, there are ways to keep track of your alternative investments, including manual tracking (download our free alternative investment tracking spreadsheet) or via online platforms like AltExchange (click here to get started for free). 

The bottom line

Ultimately, the more you know about what you’re invested in, the better decisions you’ll be able to make about your portfolio.

By staying on top of your portfolio, you’re setting yourself up to make well-informed financial decisions in today’s ever-changing economic environment.

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