How To Build an Investment Portfolio

Zoe Team

Mar 17, 2021

5 min read

A financial advisor reviewing a plan with two clients at a table

Key Takeaways

Building a portfolio requires a clear strategy and realistic goals.
A qualified wealth planner is essential for navigating complex markets.
Diversification and low-cost funds remain cornerstones of successful investing.

Frequently Asked Questions

What is the first step to building a portfolio?

Assess your financial goals, time horizon, and risk tolerance with a professional.

Why work with a wealth planner?

They provide personalized guidance to help structure investments aligned with your specific life objectives.

How do I ensure my portfolio is balanced?

A financial advisor can help you allocate assets based on your needs and regularly rebalance your holdings.

When building an investment portfolio, the best tool you can have in your toolbox is a qualified, trustworthy wealth planner.

Steps to Building an Investment Portfolio

It’s frequently said that the secret to “winning” financially is to make your money work for you, essentially using your money to earn more money. But how do you do that? Well, the easiest way to put your money to work for you is to invest it. “Investing” can sound like a scary word. Many people think that investing is exclusively for rich people, when in fact, people at pretty much every income level can invest a portion of their income. For most, what’s stopping them is knowing people simply have no idea how or where to start. So, this article will help explain the basic steps for you to begin building an investment portfolio.

Determine Your Specific Needs and Goals

Every person’s financial situation is unique to where they are in life and what future goals they have. A single 25-year-old is going to have a much different investment portfolio and investing strategy than someone who is 50 years old, planning to pay for their child’s college, and hoping to retire in 15 years. So, the first thing you need to do is analyze your specific financial situation and determine your future goals. This will help you develop an investment strategy.

One thing to consider is how much risk you are comfortable with. If you are someone that is comfortable subjecting your investment capital to higher risk for the chance of gaining higher rewards, then you may prefer a more aggressive investing strategy. However, if every stock market drop induces a sense of panic for you, it would be wise to make more conservative investments that you feel comfortable with. Your individual goals will also determine how long you plan to keep your money invested.

Building Your Investment Portfolio: Choosing Your Investments and Asset Allocation

Once you open an investment account, you can start deciding which investments you want in your portfolio. The most common assets that people invest in are individual stocks, mutual funds, and bonds. Individual stocks tend to carry the most risk. When you purchase a stock, you are purchasing a small share in a company with the hopes that the value will increase over time. However, stocks run the risk of stagnating, or even losing value. When you invest in a mutual fund, you are investing in a fund made up of many stocks and bonds. Because of the diversity of several stocks and bonds, mutual funds tend to be less risky than individual stocks. Investing in bonds is the least risky investment of the three. When you invest in a bond, you are loaning your money to the government with the guarantee of it being paid back with a set amount of interest.

How you choose to divide your portfolio between each type of asset is known as your asset allocation. If you want to invest more conservatively, then you would most likely allocate more of your investment portfolio to bonds because they are the least risky. However, if you would like to try to yield higher returns, you may allocate more of your portfolio to individual stocks with the hopes that they will quickly increase in value. Your asset allocation should always be determined by the level of risk that you are comfortable with and the strategy that you believe is best suited for your investment goals.

Continually Reassess and Balance Your Investment Portfolio

It is important to continue to monitor your investment portfolio to make sure you are on track to achieve your investment goals. You may find that parts of your portfolio are not performing the way you predicted, and you may want to adjust your asset allocation. For example, if your individual stocks are not performing as well as you hoped, you may decide to put less money into individual stocks and increase your mutual fund investments, or perhaps, an individual stock is yielding high returns and you want stocks to make up a higher percentage of your portfolio. The only way to capitalize on these changes is to consistently re-examine and rebalance your portfolio.

Another reason that people adjust their asset allocation is because their financial goals change. Oftentimes when people are nearing retirement age, they will begin investing more or less aggressively depending on their situation. As you reassess your investment portfolio, you should also be reassessing your financial goals to make sure they still align with your investment choices.

A Wealth Planner to Help You Build an Investment Portfolio

When building an investment portfolio, the best tool you can have in your toolbox is a qualified, trustworthy financial advisor. A qualified wealth advisor should have your best interest in mind, and can help you determine which investments are best suited for your specific needs and goals. Additionally, an advisor can manage your portfolio to ensure that you are maximizing your investment returns. Whether you are saving for retirement, saving for your kid’s tuition, or attempting to earn some returns on extra income, an advisor can ensure that your investment choices and asset allocation are on track to meet your goals. Zoe Financial can connect you with an experienced interest-aligned investment advisor, so that you can begin making your money work for you and setting yourself up for a successful financial future.

When building an investment portfolio, the best tool you can have in your toolbox is a qualified, trustworthy wealth planner.

Steps to Building an Investment Portfolio

Determine Your Specific Needs and Goals

Building Your Investment Portfolio: Choosing Your Investments and Asset Allocation

Continually Reassess and Balance Your Investment Portfolio

A Wealth Planner to Help You Build an Investment Portfolio

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