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8. Managing Your Portfolio > What Is Portfolio Management?

What Is Portfolio Management?

Portfolio management doesn’t mean keeping a vigil over the prices of the stocks in your portfolio and, on spotting some unfavorable signal, calling your broker yelling, “Sell, sell, sell!” (Although there are people who live this way.) On the contrary, managing a portfolio can be a far more tranquil endeavor. Successful portfolio management starts with planning, and flourishes on regular evaluation and disciplined action.

Although every successful investor eventually develops his own approach to portfolio management, the following steps provide a framework for portfolio management:

  1. Identify your financial goals: how much money you need and when.

  2. Identify your tolerance for risk.

  3. Identify the financial strategy you plan to use to achieve your goals: how much you will save and how often; how you will allocate your money between different types of investments.


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