26/03/2021
🔷Building A Personal Successful Investment Portfolio With Centerpiece .
SATO DAIJI, founder of Centerpiece Global Trades management, once said: “At the root of every tantrum and power struggle are unmet needs.” This quote sums up the story of the start-up founder-investor relationship.
When an entrepreneur and an investor first team up, it is almost akin to the initial phases of falling in love. Each side sees the common interests and vision of success, and nothing can come between the partnership except failure. Unfortunately, just as perfect love is an illusion, the path to an ideal partnership is arduous.
1️⃣Be clear about your overall goals
Are you primarily looking for capital growth from your investments, an income or a combination?
2️⃣How much risk can you tolerate?
A principle of investing is that there is a relationship between risk and reward – we expect higher risk investments such as equities to return more than low risk investments such as cash. However, taking on a high level of risk does not guarantee greater returns or it wouldn't be risky! There are many ways to measure risk but a good starting point is volatility, which is the extent to which your investments fluctuate in value.
A key factor in deciding how much risk you can tolerate is the time period you expect to remain invested. Investors with a timescale of more than 10 years can tolerate more short-term volatility, for example by investing a higher proportion of their portfolio in equities, as they have time to recover from any short-term setbacks. In contrast, an investor who can only commit to remain invested for a short period of less than five years should focus on less volatile investments.
3️⃣Choose your asset allocation
Asset allocation is the process of deciding how to spread your money across different types of investments such as bonds, equities, property, cash and absolute return funds and then across different regions and investment styles. As each type of investment will perform differently at various points in time, achieving a diversified asset allocation can help reduce overall volatility, as well as expose you to a wide range of opportunities.
4️⃣Select high quality funds
Once you have chosen an asset allocation strategy, it is important to populate it with high quality funds in each category. To help you build your own portfolio our top-rated funds represent those funds that have been rated highly by our research term on the basis of rigorous research. Alternatively, you can choose one of our ready-made portfolios.
5️⃣Monitor your portfolio
Investing doesn’t finish at the point you buy your funds. It is vital to continue to monitor a portfolio once invested and to periodically review it. This is because your asset allocation will drift over time and sometimes formerly strong funds can deteriorate or require reassessment.
Investors fund a start-up to multiply their return on investment (ROI). But they worry about the dilution of their equity, too, which impacts their ROI. A typical tech start-up goes through several rounds of fundraising. The longer your timelines, the thinner the investors’ patience. Moreover, multiple rounds of funding often mean diverging interests on the board. How deftly an entrepreneur handles the political landscape is as significant to a start-up’s success as the actual business performance.
As an entrepreneur and a current CGT investor, I empathize with both sides. Founders need to realize that when investors seek a management or leadership change, they are choosing the optimal way to get their money back, preferably in multiples. In most cases, it is not personal, it is business as usual.
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