How to Create an Investment Portfolio

A high-performing portfolio is every investor's goal. First, you'll need to develop your own objectives and strategies.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Personal Financial Software
• Wall Street Journal
• Online Finance Index Access

1. Determine what items or events you're saving for. These can be retirement, a new home, your children's education or anything else you choose.
2. Determine when you want to retire, purchase a home or send your children to college, to help you decide what percentage return you need to earn on your initial investment.
3. Decide how much money to invest. Invest what you can comfortably afford now, keeping in mind that you can change that amount later.
4. Determine how much risk you are willing to take. Many investments generate high returns and are riskier than others.
5. Once you decide the amount you are willing to invest, the returns you want to achieve, when you need the money and how much risk you are willing to accept, put together your investment portfolio.
6. An investment counselor or stockbroker is a good source of advice. Tell these advisers your objectives and ask them to suggest how to allocate your money.
7. Reevaluate your portfolio at least annually. Analyze each investment.

Tips & Warnings

• With less than $25,000 to invest, consider mutual funds rather than individual stocks to diversify and balance risk.
• Invest as much as you can afford in your company's 401(k) plan. Your contribution is invested before your salary is taxed.
• Tax-free bond funds usually generate lower returns, but they also pose less of a risk.
• Allocate only a portion of your savings to stocks, depending on your age and tolerance for risk. Invest the balance in other instruments - CDs, bonds, money market accounts.