Portfolio of Investments means simply a group of stock that you hold.It is a generally accepted principle that a portfolio is designed according to the investor's risk tolerance, time frame and investment objectives.
To my belief,one should start thinking to create his own portfolio once he start earning.
Before building a portfolio,following points should be taken into consideration:
Financial Needs and Goals
A very essential criteria.Sit in your room and think what do you want from life or what is your future goals.Calculate your assets and liabilities.Check your lifestyle and see what amount would be required to continue the same after retirement.Have you saved enough for your child's education,for any of your future dreams.Now for achieving your financial goals you will definitely look out for building an efficient portfolio.
Time Frame:
This is an important criteria before creating an effective portfolio.An investor should always consider his time frame for which he can make investments.A young aged investor can always go for long term as his liability will be lesser as compared to middle aged investor.
The middle aged investor should try making portfolio such as to continue his ongoing lifestyle post retirement.The length of time and your age are major factors in stock selection. In general, the younger you are the higher risk you can assume. The longer you have to pick stocks the more fundamental factors will come into play.
Risk:
Again risk factor plays an important role in building an effective portfolio.A young person will always assume to take higher risk and can make experiments with his portfolio.Whereas middle aged and old investors will take every step carefully as their risk taking capacity would be less.
Return:
What return are you expecting from your investments decide how you create a portfolio.This depends on the goal you have decided for your future whether it is buying a house,your child's higher education,daughter's marriage or retirement planning.
Now when you have decided your financial goals,time frame in which you want that goals to be achieved,risk you can bear and return you expect,you can look out for different options available in market where you can invest.You can always take help of financial Advisor who will help you in building your investment portfolio.
Some Common rule to create a portfolio.
A portfolio should always be divesrsified i.e you should invest in shares,bonds,keep some money as Fixed Deposit etc,so as to minimize loss.
You should always try to minimize the cost of your portfolio.
Regular investment should me maintained.
Portfolio restructuring-one should always keep check on its portfolio time to time.If you feel that certain asset are non performing,try to exit soon and look for other alternatives.
What I believe is that a portfolio should contain all assts available in market so that you can diversify your risk.To the investors of all age I would suggest that they should invest major portion in stock amrket and should start buying some good shares.They should also try investing in mid cap and small cap shares as in long term,they will tend to give higher returns.
It is also seen that in Long term,stock market have given better returns than from any other investment avenues.
They should also start investing in commodity market(should open a NSEL account)and should start buying gold and silver in small quantities.
Also one should start investing in mutual funds through SIP Route regularly.This contributes to good savings and higher returns in long term prospective.
Besides all this,one should put their money into fixed deposit,invest in life insurance,bonds etc.
The percentage of investment however depends on age of investor and risk bearing capacity.
Lets also go through an overview of returns given by different investment sector:
Average return given by
Stock market till now have been 20% CAGR
Mutual Funds(SIP)-15-17% CAGR
Bonds-8-9% annually
FD-6-7% annually
Saving Account-6-8% annually
One thing more,never forget after creating your portfolio.You should keep a regular check on it and try rebalancing it as per market situations.But that does not mean that if market goes down,you sell a part of your portfolio,because it is always meant to be long term and during long term,stock always recover and generate good returns.Also the asset allocation should be such that it beats inflation,because if inflation rate will be higher than returns of portfolio,you will ultimately be in loss.
I hope this article would be fruitful to you and you will get into structuring of portfolio.Remember their is no good time to Invest in Market.
Sumber : http://investmart-india.blogspot.com
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