How To Build An Investment Portfolio

When you start investing your money in order to grow your wealth, you, by extension, create an investment portfolio. For beginners, it’s best to build your portfolio by gradually acquiring and expanding on your investments, backed by a plan that you adjust as your goals shift.

Here we explain the qualities of a solid investment portfolio, steps to build one, and mistakes to avoid. An investment portfolio is just finance jargon for describing a collection of assets you own.

However, rather than haphazardly accumulating assets—it’s wise to build an investment portfolio with intention. Doing so helps ensure the assets you hold remain aligned with your goals and you can manage risks more confidently.

Elements of a good investment portfolio include:

Diversified: Investing in a variety of assets—such as stocks, bonds and cash—across a variety of markets helps create a portfolio that is less vulnerable to changing economic conditions or market trends.

Balanced risk-reward: The riskiness of your investments should be in line with your objectives and your risk tolerance.

Cost and tax efficient: It’s important to keep the costs of owning assets to a minimum, to avoid your expenses eating into your returns. Similarly, you want to minimise taxes paid by being aware of how gains and losses are taxed and the deductions available.

Simple and easy to manage: You should understand the purpose of every component of your portfolio and why the asset represents a good investment for you.

https://www.forbes.com/advisor/au/investing/how-to-build-an-investment-portfolio/