Creating a portfolio is all about managing risk and reward – and finding the right balance between the two is one of the most important steps you’ll take on your investing journey.
Remember, every investment carries some risk, whether it’s a volatile stock or a “safe haven” asset like gold. So, creating a portfolio isn’t about avoiding risk entirely – you can’t – but you can understand and manage the risks and build a portfolio that matches your taste for risk.
Your risk appetite says a lot about what type of investor you are. If market fluctuations make you queasy and you’re not comfortable with the possibility of losing your capital, you’re probably a defensive investor. If this sounds like you, investing in bonds should be on the menu, with smaller portions of stocks and non-traditional investments.
Over time, a more cautious portfolio won’t return as much, but you will have stable long-term growth, without the headaches of taking on more risk.
On the other hand, if you’re keen to take a big bite out of the market and can stomach some ups and downs along the way, you’re the aggressive investor type. You’d be at home having more stocks in your portfolio, even dipping into foreign equities, oil or other alternative investments.
Why put more risk on your plate? Simple – for more reward. Over time, an aggressive portfolio can bring higher returns. Just be sure you’ve got the appetite for it.
Creating a portfolio doesn’t happen in a vacuum – risk is always present. Anything from global headlines to breaking business news can move financial markets with dizzying speed and a knock-on effect on your investments.
If you’re a defensive investor, you’ll be best prepared for these risks, with assets like government bonds, gold or foreign currencies far from your main market creating a “safe space” for your money.
Aggressive investors always face risk, whether it’s from a world event headline or something as simple as an analyst’s downgrade of your favourite stock.
But while you’re intrepidly chasing opportunities, don’t forget to take a page from the defensive investor’s playbook and diversify your portfolio with some safe haven assets to hedge your riskier bets.
Whatever type of investor you are, learning to manage risk is key to creating your portfolio – whether you want it to preserve your capital, maximise your returns or anything in between.
You can learn more about risk management and investing in this Saxo webinar.
With our range of over 3,000 Exchange Traded Funds (ETFs), you can spread your risk easily across global stocks, bonds and commodities such as oil and gold.
From defensive to aggressive, there’s a SaxoSelect managed portfolio to fit your risk profile – all available for instant investing right from our platform.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
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