Asset management is a hands-on job that requires perfectly timed decision-making. The good thing is it doesn’t always have to be your hands doing the job, especially if it’s not your field of expertise. This is an area where trial and error is but fatal, because everything depends on how thorough your management strategy is.
The fate of your entire portfolio rests on your or your asset manager’s ability to make highly informed decisions. These decisions should ensure the growth and protection of your assets.
In this article, you can explore some ways to make sure your assets are well-protected and positioned for growth.
- Engage A Professional
Effective asset management usually begins with noting that you don’t have to do it yourself. Hiring a highly professional team or individual to manage your assets secures you against unnecessary heavy losses. Being a non-expert, the legal small print in certain contracts and other binding documents might expose your estate to huge risks or erosion altogether.
So, whilst you won't let go of all the planning for your assets, having a specialized team or individual to do all the heavy lifting will help you fine-tune your plans into an airtight strategy for the management of your asset portfolio.
The job of a specialized asset management professional doesn’t just stop at managing against these and other risks. It extends into directing your portfolio towards growth as well.
- Identify Possible Risks
Your estate should never be hit by surprise, and it won’t be—if the shock would be minimized or averted altogether by a predictive analysis of your asset portfolio. The unforeseen will still happen, it's a part of life, but it’s your duty to anticipate what could happen.
You should anticipate and plan for what happens if you suddenly become unable to carry out some crucial duties or protect the best interests of your assets. If you’re in business or high-risk professions, you should have in place a strategy on how to protect your assets from lawsuits against you. Understanding the different trust types will help you cover certain potential risks that might affect you and your portfolio.
An irrevocable trust will help you by upholding your will even when you are cornered to act against your best interest. This will make sure certain assets are taken out of your control. That way, no matter how much pressure might be mounted on you later, whether legal or personal, your initial decision is, as the name suggests, irrevocable.
The same factor that makes an irrevocable trust appealing is the same that makes it weak. By being ‘unchangeable,’ it may leave an asset owner powerless to change directives in the trust clauses. The initial directives will remain upheld even when the will of the asset owner has already changed. Therefore, the protection of your assets should not only seem to protect at one point, but be best suited to actively do so over time.
- Using the Dollar Cost Averaging to Your Advantage
When managing a portfolio, one must not only shield the assets from harm but must actively direct them towards growth. While short-sighted investment plans might not be able to avoid the volatility of purchasing stock, stocks that are held for long periods of time can.
Dollar Cost Averaging (DCA) allocates a specified amount of money to be used to purchase stock at certain fixed intervals. By widening the playing field, DCA is able to minimize the risks of rushed stock purchases. The process is automated; therefore, it makes sure that the cost of buying stock can be cut over time. This is a good way to make sure money doesn’t just sit in your bank and your portfolio continues to appreciate in value. A bonus point is that all of its benefits come without the headache associated with standard stock purchasing.
- Determine the Depreciation Speed of Your Assets
Knowing which of your assets are at their optimum and how long they will remain there is very important. This will avoid directing heavy maintenance fees towards certain assets when their value begins to go below their potential return on investment. This is an important step when you’re developing a growth strategy for your portfolio and when you are planning for your estate’s general management. Calculating your assets’ potential depreciation rate is one of the several estate planning tips that can be applied to help you realistically plan and manage your assets.
Estate planning is made easier when you can expect and calculate in advance how much a certain asset is likely to be worth over a period of time. This makes sure that when beneficiaries finally receive assets from your portfolio, the assets’ values still represent your will.
- Identify and Outline Your Investment Objectives
Clarify what you want to achieve in a clear asset management plan. Having a plan that details the objectives of your investments helps guide the strategies you will use to manage your portfolio. It also makes progress or the lack of it, measurable over time.
This is key to effective asset management because you want any movement in your portfolio to be quantified. The objectives you set also determine which Key Performance Indicators (KPIs) are going to guide you in your short- and long-term strategies. Your asset portfolio is very important yet very fragile and you want to know which investments to make under specific circumstances. To do this, one must give time to learning the types of investments and the economic environment surrounding your investment.
Conclusion
You can use the tips above to help you kick start discussions and strategy drafting with your asset manager, should you hire one. Your assets are a very important part of your life and there’s no better area to be on top of your game. Even if you are not doing it solo.
