What is in Your Personalized Investment Portfolio?

19 Jul

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What goes into a personal investment portfolio to make it successful? There have been many articles, guides, and studies published on this topic, but very few break down the information into an easily understood how-to guide. Here’s the lowdown for those of us without MBAs and CPA degrees.

Set Your Personal Goals

Personal Finance

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Setting goals is largely a matter of determining when you need the money. Investing for a child’s college fund when you need the money in a few years is different than investing for a retirement plan you don’t need for decades. A 401K is essential for a retirement plan, but shouldn’t be your only source of retirement income.

Time is always on the investor’s side. Long term investments are largely immune from localized market volatility. Short term investors, however, can be crippled by a sudden downward turn in the market that occurs right when you need to cash out and access the money. Make sure your investment strategies are in keeping with your goals in regards to when you need the money.

Evaluate Your Tolerance for Risk

High returns often come with high risks, and low returns with low risk. If you simply can’t afford to lose the money, never consider investing in high risk opportunities. However, when a good looking deal comes along and you can afford to lose the money, that’s how many investors earn an incredible amount of wealth.

Be honest about your risk tolerance. If you can’t afford to risk the money, consider an insured investment such as certificates of deposit or an interest bearing savings account. Other low risk (but not no risk) investments include Treasury bonds and blue chip stocks.

Invest in More Types of Assets

Volatility in one sector of the market can crush you if you haven’t diversified your assets. Invest in a variety of stocks in different industries. Also invest in bonds, real estate and other assets. Commodities are an excellent investment to counteract inflation, because their values generally rise during inflation.

However, avoid fads. Most of the time, whatever opportunity was there in the first place has come and gone by the time the ordinary investor hears about it. Make sound investments and ignore the latest “hot tip.”

Don’t Discount Possessions as Investments

Many investors think only of their stocks and bonds when considering their portfolio. Collectibles, such as cars, homes, artwork and other valuable assets are as much a part of your net worth as your stocks and bonds.

Before beginning your investment portfolio, calculate your net worth. This involves listing all your assets (including investments) and subtracting all your liabilities, such as credit card debt, home mortgages and car loans. The total is your net worth, and this is the bottom line you’re always trying to improve. If you need help with this, here is the contact information for Fisher Investments.

Don’t Just Invest and Forget About It

Investing isn’t something you do one day and ignore for years. It takes continual management to make sure your investments are earning what they’re capable of. Regularly take stock of your investments, assets, and liabilities to determine your net worth and identify ways to improve the bottom line.

What’s in your investment portfolio today isn’t necessarily what should be there next year. Always keep track of ways to improve your investments for a wealthier future.

4 Responses to “What is in Your Personalized Investment Portfolio?”

  1. Rickey April 23, 2013 at 1:56 pm #

    I want an online investment, the one that is free fraudster.

  2. Rickie April 26, 2013 at 1:06 am #

    i need to write 300 words on the tadawul stock exchange, about its history, high, lows main businesses. but i cant find much on the net, can n e 1 help me out?

  3. Dione May 11, 2013 at 9:50 am #

    What are the requirements that an Investment Bank needs to raise capital to either sell shares to make a new product OR start a company? Do you have to have your own capital to begin with? Yes? No?

  4. Johnnie May 14, 2013 at 6:36 am #

    I am planning to start an investment club. I would like to know how much an investment club manager earns. What tasks do the investment club manager do in order to justify their income? Are their any salary websites or reading materials who show what investment club managers do and what they earn.

    Thanks for your answers in advance.

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