We have heard so many times that half knowledge or half information is too dangerous. This applies to all types of information that comes to us directly or indirectly. Another important thing to consider while going for any information is the filter the right and correct part from it. You also need to filter out what actually is desired. You need to understand what type and amount of information are healthy for you and your investment portfolio. Following an information diet will make you understand your portfolio’s information needs and right balance.
Understanding the information diet
This is the era of internet and information easy access. With people synonymously using Google to information finding, the exposure and access to information are vast. It is important to differentiate what is relevant and important. And apart from the important part, the next big thing to be sure of is the authenticity of the facts provided.
The way we are so conscious about what we feed our stomach, it is also important to watch what is going into our brain and mind. Junk is bad, for the stomach, for heart, for brain and mind too. The investment industry is full of information and hear-say. What is not backed by facts and number is junk. Stay away from that junk.
Types of information available at hand
There are several types of information categories which are available in the investment market. You need to check the authenticity of all the data that comes to you.
- Useful and permanent information
This is the type that serves as vitamins and minerals to your portfolio. The information which is useful and of permanent validity is the best kind of information. For example, information regarding the fact that there is some kind of risk associated with mutual funds is permanent and useful information.
This information must be used to analyze the schemes and stays throughout the lifetime of all schemes.
- Useful but temporary
This type of information is valid only for certain phases. This should be used cautiously as if you keep a hold of such information, it may not work in your best interest. For example, information regarding a company’s performance in a certain period is good for selecting the funds of that company only around that particular period and not as a permanent benchmark.
- Useful but unauthentic
This is the most dangerous kind of information available in the market. This type of information says what an investor wants to hear or read but is not actually backed by numbers. Be aware of such information and do an ample amount of homework before falling for it.
- Needs immediate treatment
This is the crucial and rewarding kind of information which needs immediate action like buying or selling of particular type of funds. unfortunately, this kind of information gets lost in the other not so important noises.
- Useless entertainers
These are the most endorsed and read type of information. From the celebrity endorsements to catchy phrases, all sorts of marketing gimmicks are used in this type to catch investor attention but generally, most of it is of no use.
Dieting advice from piggy
Follow a healthy diet, the one which is full of vitamins and mineral avoids calories and keeps the cholesterol and blood pressure in control. Calories are the bad elements of information which are of no use but are catchy and luring. Any bad information will severely impact the health of your portfolio and pump up the blood pressure.
Filter out the calories
As we said earlier, you need to beware of the junk. Junk information will only lead to calories mis-balancing your portfolio. Keep away from noises, rumors, and all the elements which are not good for you and your investment portfolio.
Keep working out
As important is the exercise for you, so is it with your investments. A balanced diet brings about the best results with a workout. Once you have made sure that your portfolio is filled only with healthy elements, keep the work out on. Do mental and physical yoga regularly and review your portfolio at regular intervals.
Once you put the health of your portfolio on your priority list, your portfolio will keep rewarding you with the best returns.