Having a well-maintained portfolio is vital to building wealth and becoming a successful investor. Individuals who choose to manage their accounts must consider asset allocation and risk appetite. But more importantly, it must meet your goals. Using a systemic approach to investors can construct a portfolio aligned with investment strategies to win.
Most portfolios will likely consist of 4 common investments: Index funds, Managed mutual funds, Individual stocks, and Dividend-paying stocks.
The first step to building a profit-making portfolio is TRUST. You have to believe that investing in stocks, bonds, currency, and/or real estate allows you to build wealth. Without trust in the market, you will be unable to make confident decisions or take the necessary risk to reach your goals. You have to believe that a profit-making portfolio is attainable.
There is no simple formula that can find the right asset allocation for every individual. Investors may use different asset allocations for different objectives. Asset allocation should also include your goal, time horizon, and risk appetite. For example, I believe that most people today have more short term money than long-term money, simply because life events have changed. More people are buying homes later, choosing second careers or starting a business, becoming grandparents earlier in life, and taking care of elderly parents earlier. These factors change long-term from 5-10 years to 3-7 years of investing. The objective of asset allocation is to balance risk and reward apportioning a portfolio’s assets.
Are you ready?
Do you have the mindset to focus on creating a profit-making portfolio and are you in the position to take advantage of investment opportunities? Investing is a privilege and not a right. It is the privilege that is granted to those who have limited debt, sufficient income, and investable funds.
Remember, the possibility of greater returns comes at the expense of greater risk of losses. There are three main asset classes – equities, fixed-income, and cash and equivalents. Each has different levels of risk and return, so each will behave differently over time.
Start Your Portfolio
There are several ways you can go about choosing the assets and securities to fulfill your asset allocation strategy. Once you determine the best asset allocation for your lifestyle and your strategy.
Stocks- Find companies that issue stocks that meet your level of risk and also invest in companies that you understand how they make money. This is the most work-intensive means of adding securities to your portfolio, and requires you to regularly monitor price changes in your holdings and stay current on company and industry news.
Bonds-In choosing the right bonds, there are several factors to consider including the coupon rate, maturity, the bond type, and the credit rating of the company, as well as the general market and interest environment.
Mutual Funds- Mutual funds come in a wide range of asset classes, which allows you to hold stocks and bonds that are professionally managed. Of course, fund managers charge a fee for their services, which will subtract from your returns. Index funds are another similar choice; that tends to have lower fees because they mirror one of the established indices and are thus passively managed.
Exchange-Traded Funds (ETFs) – If you prefer not to invest with mutual funds, ETFs can be an alternative. ETFs are essentially mutual funds that trade like stocks. They’re similar to mutual funds in that they represent a large basket of stocks, usually grouped by sector, capitalization, country, and the like. But they differ in that they’re not actively managed, but instead track a chosen index or another basket of stocks.
Rebalance When Needed
Rebalancing is the process of buying and selling portions of your portfolio to set the weight of each asset class back to its original state. This is also a good tool when investor’s investment strategy or risk appetite has changed, you can use rebalancing to readjust the weightings of each security or asset class in the portfolio to fulfill a newly devised asset allocation. Changes in an investor’s lifestyle may also warrant changes to his or her asset-allocation strategy.
For more tips and tools about investing and trading in the Green Rush” go to http://www.ccimonecasson.com.
Visit http://www.ccimonecasson.com for more information on trading and investing in the “Green Rush”. Let’s Talk #Money, #Stocks, & #Green.
Subscribe to our Exclusive Video Library at