11 Nov Our Beginner’s Guide to Building an Effective Investment Portfolio
Investing can seem intimidating to some – especially if you are a beginner. For those wanting to make smart financial moves in their life, investing can be a great place to start.
Work smarter, not harder: Investing can help grow your savings in the long term and provide you with more than just your salary as an income stream.
Investing your money can seem like a major risk. But, as you leave your money in the hands of the fluctuating market trends, you often can see the benefits in the long-term. While you have little control in this instance of how your money grows once it’s invested, you do have power over your investment portfolio, which is crucial for financial success.
Building an investment portfolio can be overwhelming, especially when you’re faced with complicated jargon that can be next-to-impossible to understand. Reaching out to a financial advisor can help resolve some of the difficult questions when it comes to investing and help you invest to reach your financial goals.
So if you’re thinking of ways on how to build an effective investment portfolio, here’s what you can do to invest for success:
Tip #1: Know What Risks You’re Willing to Take
When you plan to invest, one of the first things you should know is how much risk you’re willing to take. Truthfully, no investment is free from risk.
However, when it comes to an investment strategy, you can choose what level of risk you are willing to take, so you can align your strategy with your financial goals.
With that said, determining your risk levels can be a great place to start before selecting an investment type.
Here are some factors that may impact your risk appetite:
- Ability to Take Risk: This refers to your capacity to take risks, and with this, your income, loans, liabilities, and age can influence your appetite. Usually, younger individuals can afford to take more risks with the perspective that you will ride out the highs and lows of the market throughout your life.
- Need to Take Risk: This will solely depend on your financial goals and the rate of return you would like to aim for. Depending on your financial situation, taking a higher risk may be beneficial in helping you achieve your goals sooner.
- Willingness to Take Risk: Willingness is purely behavioural. With that in mind, you need to be sure and comfortable with taking risks before you start investing. A financial advisor can help you determine what risks may be worthwhile, after taking into consideration your individual needs and financial circumstance;
- Time Horizon: This refers to how long you’re willing to invest. Your time horizon can help provide a framework for your investment and could determine how long it’ll take for you to reach your goals;
Tip #2: Use the Power of Diversification
Diversifying your investments and your asset classes can help you remain protected.
Asset location involves choosing which asset types you’d like your money to go towards. This usually involves diversifying your money into different types of assets.
Through diversification, you can protect yourself from specific industry or asset fluctuations.
Whilst there can be offset losses on some investments, others can have gains and in turn, you can protect yourself and balance out your investment returns.
Tip #3: Seek Help from a Professional
Many don’t realise that building an investment portfolio can be much easier when you seek help from experts.
So when it comes to investing, especially when it’s your first time, it can be worthwhile asking for assistance from an experienced investment advisor.
Instead of researching and having doubts about your investing decisions, seek expert advice to see how you can grow your wealth successfully!
If you work with a professional investment advisor and create an outstanding portfolio, you can trust that you’ll have more potential in achieving your financial goals.
How Can We Help You?
Leo Wealth is an established financial planning practice in the Central Coast. Our team focuses on creating personalised financial solutions and strategies for clients of all ages and situations.
If you’re looking for an experienced investment advisor, reach out to us today and be one step closer to reaching your financial goals!