The idea of building an investment portfolio might seem intimidating, but it can be easier than you think. By working with a financial advisor, you can create a portfolio that aligns with your financial goals now and in the future.
How to build an investment portfolio it’s important to take into consideration your risk tolerance, how long you have to invest for and your investing objectives. Having an understanding of these factors can help shape your asset allocation, which determines how much of your money should be invested in stocks and bonds, as well as if you should diversify within the various assets classes.
Asset class diversification helps to reduce risk by spreading your investments across different types of securities, such as stock markets, mutual funds, exchange-traded funds (ETFs) and bonds. As each of these investments has different risk and return characteristics, they tend to be less correlated with one another – meaning that when one of your investments performs poorly, other assets may perform better.
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Depending on your risk tolerance, you might also want to consider including some more specialist assets in your portfolio to further diversify it. These might include property, private equity and commodities like gold. Alternatively, you might prefer to incorporate ‘balancing’ assets into your portfolio such as corporate or government bonds that pay interest to investors and can provide lower returns than shares but are less volatile. Your Edward Jones financial advisor can offer further insight into these options.…