Tips on beginning a sound investment portfolio

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First off, we’ve to mention that how you decide on allocating your assets for your portfolio today will be subjected to future economic fluctuations and redefined by possible alterations in your investment objectives. This means you’ve to regularly track your asset allocation and, when needed, spend time rebalancing.


Having said that, you need to make your portfolio as financially sound as possible, based on good risk tolerance, asset allocation policy, and design. And knowing your personal investment goal is the key first step. Why are you investing to begin with? Is it to prepare for your kids’ college education? To buy a new car or house? You need to identify exactly which ones top your priority to better handle liquidity needs and time frames.


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Speaking of liquidity, which essentially means the speed by which you convert your investments into cash, decide on the portfolio content based on your need. For example, stocks that are publicly traded are more liquid than real estate, so decide accordingly. Liquidity will prove crucial when you consider time horizon. It’s one thing to invest because you’re thinking of your retirement years into the future and another if your child is going to college soon.


Note that the longer the time horizon, the more your investments become riskier. Still, financial experts would advise investments with longer maturities as these allow you to get over any possible dips in market value and are thus effectively more lucrative. Apart from real estate, a good example of such are common stocks. Conversely, if you prefer shorter terms, then go for more conservative investment options such as treasury bills or money market funds.


Hey, everyone. I am Steve Sorensen from Colorado, and I am a CPA, business blogger, and financial advisor providing a wide range of strategies on avoiding employee embezzlement, legally lowering taxes, and improving a business’ overall financial structure. For related posts, visit this blog.

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