As mentioned in Part I of this article series, there are three (3) primary areas where one would be wise to consider using specific strategies designed to help enhance your profits, limit risks, or both.

1. Program Selection
2. Portfolio Management
3. Money Management

My previous article explored Program Selection. Now let’s look at the second primary area of concern, portfolio management.

2. Portfolio Management

Everyone tells you to diversify and they’re right, you should; but that’s not the end of the story.

How many programs should you diversify into? If you’re into paid-to-surf programs, make sure you don’t diversify so much that it takes an excessive amount of time to get all your surfing in. Most programs require you to surf their advertisements on a daily basis and failing to do so can quickly reduce your ROI. Also, don’t diversify to the point where you have problems keeping track of your portfolio.

Many people say to get into the lower ROI sites because they last longer. That’s a little misleading, actually. If one site is paying a daily ROI of 2%, then it only needs to survive half as long as on that pays 1% per day. But you also have to take into consideration that “time is money”, and the longer you have to wait to get your profits, the more costly things are in terms of risk and overall return.

Another thing to understand is the principle of diminishing returns when adding programs to your portfolio. In other words, when you spread your risk from being in one program to being in two programs, you’ve cut your risk by 50%. Adding another program will only cut your risk by 33% and a fourth program will only cut your risk by an additional 25%.

So you can see that each program you add to your portfolio offers less and less in terms of decreasing your overall risk. Ideally, you should probably be diversified into 10-20 different programs. Try to be in five programs at the very least. Too many people put all their eggs in one basket because they’ve fallen in love with the program. This is a classic scenario for disaster. Don’t let it happen to you.

There’s a difference between supporting the programs you belong to and defending them against rumor mongers and such in the forums, compared to blindly believing in a program despite all the red flags.

What kinds of red flags? Good question. When should you get out of a program? The single most reliable indicator of a program about to fail is late payments. The best way to monitor this indicator is to watch what people are saying in the forums or at your favorite monitoring service (e.g. ROIDetectives.com)

That covers the essentials with respect to portfolio management. Stay tuned for the conclusion to this article series, Part III which covers money management.