This can be one of the most challenging parts of portfolio management. Every individual has different needs and wants. The very first step to successfully manage your investment needs is to identify them. One way is to start by drafting an investment plan which list out in a clear manner your goals. Be specific as you can, so that you can determine what to invest in to realize your goals. An example would be "I want $100,000 to finance my children's overseas education in 15 years time."

To help you understand your own investment needs and goals, here are some questions to ask yourself:

Are my dreams and goals clustered or spread out?

If they're clustered, are they to take place in a short time or am I willing to wait for some of them?

How much money will each one take to accomplish?

How much risk can I accept ? A lot ? Only a little ? Many do not want to take more risk than necessary. However, the potential returns on your investments depend on the level of risk you take. The most important thing is for you to be comfortable with your investments. It is dreadful making potentially high-return high-risk investments and not able to get good sleep night after night. But also realise that you have to pay a price to be overly risk adverse and not able to reap reasonable returns.

What would happen if I lost everything?

Other factors need to be taken into consider to help you determine how much safety, income, and growth you want. Aside from your dreams and goals, you need to also consider…

Your current income and compare that with your current expenses. In the near future, will you be relying on your portfolio to provide you with some income?

The future is always uncertain. You should thus ensure a certain level of asset liquidity to cover unexpected expenditures. This is important as illiquid assets can only be converted into cash at a loss, or it may take a long time to dispose of such investment.

You should consider your age and your ability to "bounce back." A young person can probably stand a little more risk because – if they should lose it all – they'll have time to rebuild. An older person does not have the same amount of time.

Your responsibilities should come into play as well. Do you have a spouse or dependents that rely on your income?

How much you have to invest today ?

So, knowing yourself is critical to creating and managing a portfolio that will do what you want it to do. This knowledge will help you set realistic future financial goals and will help you to decide how much risk to include in your investment strategy, plus much more!