A Step-by-step approach to eToro portfolio planning 2023

Investing on eToro? Let’s dive right in and optimize your portfolio planning with asset allocation, investment strategies, risk management, and more! 😎📈

1️⃣ Establish a Risk-Return Profile

Create a solid foundation by defining your risk and return preferences, investment goals, and a suitable benchmark for tracking performance. The risk-return profile will guide your asset selection and allocation. 🎯🔍

2️⃣ Asset Allocation: The Balancing Act 🏋️‍♂️

Asset allocation is crucial for achieving desired risk levels and returns. eToro offers a wide range of assets such as stocks, ETFs, commodities, cryptoassets, indices, and currencies. Consider these allocation approaches:

• Constant weight: this is one of the simplest techniques of asset allocation for a portfolio where the total proportion is split into different assets on a constant percentage basis, for example with a third invested into equity, another third into commodities and the last third into indices. In case one of the asset classes increases or decreases in value over time and starts to represent a larger portion of the total portfolio than determined by the original allocation an investor might consider re-balancing it. The original mix of asset of course depends on the risks you are willing to take as certain asset classes, stocks for example, may be relatively more volatile than others. This allocation technique is however quite rigid and may lead to overlooking potentially successful opportunities.
• Dynamic allocation: is the opposite of the passive constant weight allocation. Under this strategy the mix of assets is constantly adjusted with the sale of assets that decline in value and purchase of those that appreciate.
• Tactical allocation: is a kind of an intermediary between the constant and dynamic allocation styles where although a master mix of assets is established an investor might engage in short-term tactical deviations from it to take advantage of emerging opportunities.

3️⃣ Investment Strategies: Find Your Style 👔

eToro offers various investment strategies, including passive (buy-and-hold, dollar-cost averaging, dividend investing) and active (value investing, growth stocks, momentum strategy) approaches. Choose one that aligns with your goals and risk tolerance. 🧠💼

Here are some of the most general investment styles:

1. Value investing. Value investing involves investing in assets that are priced too cheaply on the market compared to their intrinsic value and is based on fundamental analysis of a company’s stock. An investor analyzes the financial performance of a firm to determine a potential value it may deliver over time. eToro makes this process convenient by providing a short summary of the financial performance of a company, with financial statements and key statistics.
2. Growth Stocks. This strategy involves investing in companies with high earnings growth. These may increase in value over time by re-investing their cash rather than paying it out in the form of dividends.
3. Momentum strategy. Momentum strategy is one of the most basic investment strategies that relies on the premise that groups of well performing stocks (winner portfolios) will continue to do well in the future while looser portfolios of poorly performing assets will keep on loosing value.

4️⃣ Risk Management: Safety First! 🚧

Implement risk management techniques to protect your investments and ensure long-term success. Some popular methods include:

• Diversification: invest in a mix of uncorrelated assets
• eToro risk management tools: use stop-loss, take profit, and risk scores
• Trade size control: allocate funds carefully to each position
• Hedging: invest in multiple asset classes for extra protection

5️⃣ Monitoring, Assessing, and Rebalancing: Stay on Track 📊

Keep a close eye on your portfolio’s performance and make necessary adjustments. Use eToro’s ‘Stats’ page to monitor risk levels, monthly returns, and position profitability. Regular assessments help with risk management and spotting potential issues. 📉📈

6️⃣ eToro CopyPortfolios: Simplify Your Investments 🤖

If constructing a portfolio feels overwhelming, consider eToro’s ready-made, managed, and frequently rebalanced CopyPortfolios. They provide a convenient solution tailored to various investment themes. Remember, past performance is not an indicator of future results. 🧩🚀

🌟 Wrapping Up

Now you’re equipped to master eToro portfolio planning! Remember, your approach should match your unique goals, objectives, and risk tolerance. Stay disciplined, monitor your investments, and enjoy the eToro platform. Good luck, and happy investing! 🎉💰

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GENERAL RISK WARNING

• ▸eToro is a multi-asset platform that offers: Stocks, Crypto assets, and CFDs.
• ▸CFDs are complicated and can make you lose money quickly because of leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. Think about if you understand how CFDs work and if you can afford to take the risk of losing your money.
• ▸Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
• ▸Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
• ▸Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
• ▸eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity-specific information about eToro.

Be warned!

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Author & Expert Trader - Financial Analyst :

My name is Bart Bregman and I am a full-time professional trader with nine years of experience. I specialize in shorter-term trading using technical analysis, and I have extensive experience with Stocks, CFDs, Options, and Crypto trading. I believe that there is no such thing as a bad trade. I'm currently traveling the world as a digital nomad trader. You can follow my journey on Instagram at https://www.instagram.com/bart_bregman/