Creating an investment portfolio
Creating an investment portfolio

Creating an investment portfolio

There are certain steps to take when you are creating an investment portfolio and different things to consider. This quick guide will help you to figure out exactly what you need to do to make your money work for you.

a. Figure out what you are saving for

It’s always a good idea to outline your goals and this way you know exactly what you are planning to do. Are you doing this so that you have money for college for your kids? Are you looking to buy a house, a new car? Or is this going to create a nest egg for when you retire?

b. Figure out when you will need the money

Next you are going to figure out when you are going to need the money. Obviously, it’s not a good idea to invest if you need the money within a few weeks. It’s always a good idea to plan ahead with your investments. But planning ahead will help you to understand how much of a return you will need on your investment. Depending on how long you can keep the money invested, you might put it into stocks, mutual funds, bonds, etc.

c. Figure out how much to invest

Don’t invest more money than you can afford to invest. If your circumstances change, you can always invest more money later. Always make sure you have an emergency fund (cash on hands) that will cover your expenses for at least 3-6 months should something unexpected happen.

d. Figure out your risk factor

Decide how much of a risk you are willing to take. There are plenty of investments that offer better returns but with a risk factor that is higher than others. If you love risk invest in penny stocks. If you hate to risk, mutual funds are probably the best choice for you. But sometimes it is best to diversify. Put some money into stocks, some into mutual funds, etc. This way the risk will be moderate, but return can be higher than if you just invested into mutual funds, for example.

e. Put it all together

Once you know the details of your investment, put it together in a portfolio, including when you need the money, how much to invest, and what you are expecting as a return.

f. Speak with a counsellor

Next you want to go and talk to a counsellor who specializes in investing and see if they can offer any advice to help you to achieve your goals. Or you can save some money and figure this out yourself if you are educated enough to make this kind of decisions. But since you are reading this you are probably interested in making this kind of decisions yourself, sooner or later.

g. Look over your portfolio

You should take your portfolio out at least once a year and see where you are with your investment. Preferably more often.