Whether savings for retirement, planning for college or for purchasing big ticket items like a new home, a systematic investment plan can help you reach your goals. Here are some tips to help you build and manage your investment portfolio as you strive towards your investment goals. These tips apply to all levels of investing knowledge – whether you are newcomer or a seasoned investor looking to refine your skills.
- Determine how much money to invest and where to invest it. You have a variety of options to choose from, including stocks, bonds, mutual funds, Exchange Traded Funds (ETFs), CDs, money markets, and much more.
- Find a brokerage and open an account.
- Set parameters – understand where you are; what it will take to reach your goals; and when will you be using the money. The answer to these questions will help determine how readily available your funds should be and how much risk you should undertake.
- When choosing how to invest, a balanced strategy can help you manage volatility and asset growth potential. Two concepts to keep in mind are:
- Asset allocation – the process of spreading your money among a variety of investments, such as stocks, bonds, or short-term investments.
- Diversification – choosing a variety of investments within the major asset types. For example, diversifying your holdings among stocks, bonds, and shorter-term assets like money markets. It’s like placing your eggs in more than one basket.
- You may save more money by making contributions on a regular basis. You also benefit from a concept called dollar cost averaging, which is the practice of buying the same dollar amount of a security at regularly scheduled intervals.
- As your investments go up and down in value, your portfolio balance will change over time. So, once you’ve assembled a diversified portfolio that puts your money to work toward your goals, keep monitoring and adjusting as necessary on a regular basis. Keep your overall risk within your comfort zone and monitor performance to track with your goals.
Here’s to many happy, productive and profitable investment returns.
