_{Money management graphics. Source: Due.com}

Money Management

Money management is simply the process of tracking your expenses, investments, budgeting, banking, and checking your taxes. Sometimes, it is called investment management. To put it simply, it's trying to maximize your profits based on your earnings.

Money management techniques were developed so that institutions, firms, or individuals can minimize their spending on unnecessary items that do not have important value or do not contribute to their standard of living, assets, and portfolios. This is a broad concept that covers and integrates resources and answers around the investment industry. Enabling consumers to have access to varying resources and applications in the market. This helps consumers manage a lot of aspects of their finances.

Usually, there are financial advisors that can provide qualified money management advice to investors. These financial advisors who can help with money management are usually affiliated with banks and investment services.

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Money Management Plans

I have been quite exposed to different financial atmospheres since I both worked as a representative for a transfer agency for stocks in the US and Canada and as a financial advisor for an insurance company. We work like brokers but we were assigned by the company themselves as the ones issuing and managing their stocks, while brokers are considered 3rd party services. However, transfer agencies can have their own brokerage firms/departments as well.

Those work experiences, combined with my knowledge of cryptocurrency allowed me to properly gauge how I should manage my financials. I won't say it's easy though because there are a lot of factors to consider in money management, not just the management itself, you also need to consider or factor in things like earnings, liabilities, debts, spending, and savings.

Currently, I have the basics covered in my opinion. I have life insurance and an educational fund for my kid. We have our savings in an account that earns interest better than banks. I also have some passive income from small businesses/gigs that I have (which is quite small, but I'm already working to grow it).

In the future, I plan to diversify even more. If the budget allows then I am planning to add another insurance policy, have some money put in stocks and forex, and some amount invested in cryptocurrency for the long-term.

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Portfolio Management

Portfolio management on the other hand is the act of selecting and managing multiple investments depending if it's for the short or long term. Factoring in risk tolerance and financial objectives is very important. Managing portfolios require attention to detail especially in weighing the strengths and weaknesses of each investment in your portfolio.

There are a few key elements of portfolio management, namely: asset allocation, diversification, rebalancing, active, and passive management.

Asset allocation is how you decide where to put your money. There are different monetary vehicles you can choose from like stocks, forex, cash, bonds, etc. Knowing where to put and how to differentiate those assets is what this is about.

Diversification is spreading the risk you have from investing in different assets. Real diversification is putting your investments into different classes, types, and places.

Rebalancing is like a reset button that makes your assets and risk go back to where you started. An example is when your portfolio that is split to 30/30/40 became 20/30/50 after a year, you will buy or sell or move some assets to go back to the original 30/30/40 split so you can have the same risk and allocation as before.

The difference between active and passive portfolio management is where you put your money and how you handle your portfolio. Active management usually has more involved management like your own broker or fund manager. This is designed to outperform the usual market to increase profit at the expense of increased risk. Passive on the other hand are portfolios that are in funds or indexes usually handled by fund managers. Management fees for active are way more than fees in passive portfolio management.

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Portfolio Management Plans

As of the moment, the only portfolio I have is with my insurance policy. The fund I have there are currently diversified or split into 3 different allocations. Part of it has lower risk and part is invested in higher-risk funds.

These funds I have are currently called passively-managed portfolios because they are mutual funds.

If ever I will have more amount to allocate in different assets like stocks I will probably handle it with a broker, since I already have a lower-risk portfolio, having a higher-risk one won't hurt and will actually balance where I allocate my assets even more.

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Management Failure

I guess, since I'm very new to investing, I can't really tell if the funds that I have already failed or not - since those are for the long term. However, I did try to invest in cryptocurrency before.

This was back when BTC first reached 20,000 USD. I had a bit of earning and I placed them in a certain cryptocurrency - I forgot the exact name/ticker symbol but I know that I lost 95% of my portfolio because of that certain crypto.

I was supposed to keep it for around 3 to 6 months and see where it leads. However, after a few weeks, the value dropped and took out 90 to 95%. I still waited but the value never recovered. I am not entirely sure if I completely forgot about it already or I just sold what I have left because of sheer frustration.

Conclusion

Money and portfolio management are two very important things to learn and eventually master if you want to be an investor. First is money management, because this will enable you to have a balanced financial status that will enable you to prioritize and invest.

Once you got the money management right and you are already capable of investing, proper portfolio management can definitely guide you into becoming a successful investor.

You should not be hasty when investing and make sure to do proper research before shelling out your cash, or else you'll be bound to lose it. It is also important to not be an emotional trader/investor.

Thanks a lot for reading!

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_{Images with no source were made by me. Thanks @stream4u, @steemitblog, @steemcurator01, @steemcurator02.}