How to Create an Investment Portfolio

Video Transcript

"My name is Julie Asti. I'm a certified financial planner with Asti Financial Management and, today, I'm going to talk about how to create an investment portfolio. If you're looking to create an investment portfolio, there are a few things that you should initially consider. The first is going to be what your risk tolerance is and the second is going to be what your time horizon is. So, you may want to have a portfolio that's dedicated to retirement or you may want to have an investment portfolio that's dedicated towards reaching other financial goals that may be shorter than retirement. It may not be 30 years out. So, your risk tolerance and your time horizon are going to certainly affect the investment portfolio that you're going to create yourself in terms of the asset allocation and the different diversification that you're going to be building for yourself. One of the things that you're going to want to consider in looking at building an investment portfolio is if you're going to be using mutual funds or if you're going to be using a stock portfolio or if you're going to be using a combination of the two of those. You're also going to want to think about if you're going to want to employ a passive strategy. And a passive strategy is one where you use index mutual funds or index exchange traded funds to build your portfolio or if you're going to want to use actively managed funds, which would be an actively managed mutual funds to try to build your portfolio. Those are all things you're going to want to consider. If you're just starting out and you have assets of less than say $10,000, a really good option for you to create an investment portfolio to get you going would be to invest in a target date fund. And a target date fund can either be in conjunction with your retirement or the target date of your investment goal, for example, saving to buy a car in five years or a house in ten years. You simply look for a target fund that's offered by most of the mutual funds, like Fidelity and TRowe Price and Vanguard, that will have a date set to it. So, we're in 2008 and, if you're looking to have a goal that's going to be in seven years, you'd buy a 2015 fund, a target date 2015 fund. And you would invest your money in that fund and it would managed with a goal of having the money disbursed from that fund in 2015. That's an easy way to take a look at building an investment portfolio. If you're truly going to be building a portfolio that's going to be a diversified mutual fund and stock portfolio on your own, it's going to require a lot of research, it's going to require really clear definition of what your risk tolerance is, what your financial time line is and you're going to have to take a look at different asset classes and diversification and different investment vehicles that you think are going to be put together to create your portfolio. And that's going to require a lot of research. Most times, when people start really looking at an investment portfolio, they either start looking to work with a professional, or they just dedicate hours of research to make sure they build one correctly. My name is Julie Asti. I'm with Asti Financial Management and you can learn more about my company or my services online at www.astifinancial.com."