Investment Portfolio Management
Guide Summary
- Portfolio management is about building and maintaining a mix of investments that suit your goals, risk tolerance and time horizon — whether you ‘Do it Yourself’ or want your investments ‘Selected for You’.
- Asset allocation (your mix of stocks, bonds, cash etc.) is key to balancing risk and return, and should be reviewed and rebalanced regularly as markets and life change.
- Avoid common behavioural mistakes like panic-selling or chasing trends — staying consistent and thinking long-term usually leads to better outcomes.
What is portfolio management?
Portfolio management is the ongoing process of you selecting, monitoring and adjusting your investments to meet your financial goals.
It’s not just about choosing a few investments and crossing your fingers – it’s about seeing the full picture and making smart, informed choices. That means thinking about the mix of investments you own (also called asset allocation), how much risk you’re taking, and making regular adjustments as life or market conditions change.
Done well, it can help you grow your wealth steadily while keeping risk at a level you’re comfortable with.
Investment portfolio management examples
The following portfolio management strategies are commonly used:
Cautious portfolio: Might include a large portion of bonds and cash, with a smaller slice in equities.
Great for: people close to retirement or those who don’t want much risk.
Balanced portfolio: Typically splits investments between equities and bonds, aiming for moderate growth with manageable risk.
Great for: long-term investors who want a bit of both worlds.
Adventurous portfolio: Heavier on equities (including global and emerging markets), and lighter on bonds or cash.
Great for: investors with a higher risk tolerance and a longer time horizon.
These are just examples — your ideal portfolio depends on your goals, timeline, and how much market fluctuation you’re okay with.
DIY investing vs managed portfolios
There are two main tracks you can go down with your portfolio:
DIY Investing
You pick and manage all your investments yourself.
Great if: you like having full control, enjoy researching markets, or want to tailor things really specifically. But it requires time, confidence, and a steady hand when markets wobble.
Managed Portfolios
You choose a risk level, and a provider (like Chip) builds and maintains a diversified portfolio for you.
Great if: you want a more hands-off approach, but still want exposure to the market. You’ll usually pay a small fee for this convenience, but it can be well worth it if it helps you stay invested long-term.
What is asset allocation & why it matters?
Asset allocation is the mix of different asset classes in your portfolio – typically things like equities (stocks), bonds, cash, and sometimes alternative assets like property or commodities.
Getting the mix right is crucial. Why? Because it’s one of the biggest factors that affects your portfolio’s overall risk and return.
- More equities – higher potential returns, but also more ups and downs.
- More bonds – lower risk, but also lower growth.
Your ideal allocation depends on your goals and how long you’re planning to invest. This is not set in stone, and it can (and should) shift over time.
How to rebalance your investment portfolio
Over time, some of your investments will grow faster than others, which means your portfolio can drift away from your original asset allocation. That’s where rebalancing comes in.
Rebalancing means adjusting your investments to bring them back in line with your target allocation. For example, if stocks have surged and now make up 80% of your portfolio instead of your intended 60%, you might sell some and buy more bonds or cash-equivalents.
Some managed portfolios (like what’s listed on the Chip app) automatically rebalance for you. If you’re doing it yourself, you might want to set a calendar reminder every 6 or 12 months to review your allocation.
Understanding behavioural investing & common mistakes
When it comes to investing, your emotions can be your worst enemy. Many investors panic-sell when markets fall, or chase after the latest stock or trend, only to end up buying high and selling low.
This is known as behavioural investing, and it’s often where people slip up. The majority of investment gains are dampened by a degree of investor error, and generally the less decisions you can make, the better.
The next guide in our series will dive into this in some more detail.
When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than your original investment. Chip does not offer financial advice and this should not be considered as a personal recommendation.
