Some of the best advice I can give a client about starts with the understanding of the most basic element of portfolio management: Discipline. Having a blueprint or an Investment Policy Statement and avoiding are crucial elements to this discipline and a portfolio's ultimate success over time. The Investment Policy Statement is a personally tailored document that sets out the Strategic Asset Mix and outlines the parameters, rules and regulations for your portfolio. I use this religiously in my process to navigate through the day to day management of your investment funds.
Strategic Asset Mix (Investment Policy Statement) - one of the most important aspects in determining long term rate of return is your personal strategic asset allocation. Determining this asset mix considers your investment objectives, time horizon, investment knowledge, risk tolerance, need for income and among other things age. Re-balancing this asset mix may become necessary several times a year.
Tactical Asset Allocation - Is a more active strategy allowing one to deviate from the strategic mix over shorter periods of time to take advantage of current market conditions to enhance returns.
Security Selection - This step of the process determines the actual securities to use in the construction of the portfolio. This could range from mutual funds, stocks, bond, GICs, exchange traded funds etc. Three things to consider are the securities fees, its tax efficiency (unregistered accounts) and its liquidity.
Monitoring and Adjusting - By no means is a portfolio static. It should be reviewed at least quarterly and adjustment made referencing the investment policy statement.
Performance Reporting - Comparing the performance of the portfolio to a benchmark allows an investor to see their performance relative to a similar portfolio.