Starting an investment portfolio can be an intimidating task. Whether you are planning to monitor and trade regularly or set up a one and done growth portfolio, the amount of time it can take to set up a solid plan for growth with your money can shake even the most stedfast of us.
Although it can be intimidating, setting up a stock portfolio is a great way to build your wealth over time, and can even be the reason you never “work” again. Getting there takes time, patience and market knowledge, but it all starts with the construction of your investment portfolio.
So, how do you start your portfolio construction? Great question. This step-by-step guide will help you get started on building your portfolio for sustained health, and give you a few tips on attacking the market for the money monitor and trader.
Educate Yourself
Of course this the starting point. Understanding how your money is used in the market is the first key to successfully growing your wealth. By investing in the market place, you can incur money from growth bonds or by investing in companies in the market.
A better strategy is to build both if you can, but we will get there. By spending money, your money is invested into the company you buy into. You earn dividends from profit sharing in the company, and those are mostly factored quarterly.
If this is your first venture into any sort of stock market trade or bond, it’s best to look around a few of the stock watcher websites and research a few companies you know. This will help you get familiar with the systems used to monitor and grade the investments you could make.
Look into a few of the different ratios used to grade the stocks, so you can qualify them on data-driven levels. Using ratios like the Purchase/Earnings ratio, or P/E ratio, you can get better insights into the potential for a stock and what you can expect to earn from dividends. Rations like the PEG ratio, Price to Sales ratio and the Price to Earnings Ratio are great tools for seeing how the company operates and gives back to the shareholders.
Allocate Your Capital
As we stated before, it’s a good idea to build a diversified portfolio if you can. If you have a sponsored 401(k) and don’t have your own trading profile, things could get tricky for you, but it’s still possible to invest for long term growth, just maybe not as much.
Starting off, it’s a good idea to split your investments into at least stocks and bonds to balance your growth and sustain your money. Not touching your money for 20 to 30 years might seem a bit insane, but you will thank yourself for what you have done later. In old age, those bonds can help you through a pinch.
If you are looking for solid place to start, an index bond is a great idea for additional and sustainable growth because it spreads your funds into areas that can mimic market trends. Since the overall market’s objective is growth, that’s a good way to go for long term growth, especially if you can buy tons of shares for cheap. Keep in mind, some investment opportunities have minimum buy in numbers, so what might look like a great deal could cost you $5000 to get in.
Monitor the Market
There are tools and planners available all over the internet that can help you do just this. If you are the casual investor or the market trading maniac, you have to make sure you are keeping your eyes where your money is.
With the equipment available on the web, some subscription based and some not, you can monitor the market and your specific stocks to track their growth day by day. You should also keep track of monthly, quarterly and yearly values to make sure your investment is making you money, and not just staying where it started, or worse, losing you money.
If you stay on top of your stocks like a hawk, you can buy into huge growth stocks at large numbers and trade or sell when the value starts to see a growth plateau.
Buy In Regularly
Once you have your initial investment portfolio set up and ready to go, you shouldn’t just walk away and say, “see you in 20 years.” Instead, you should look to build on that investment by buying in regularly and rearranging your assets to maximize your money.
The more you buy into growing stocks, the more potential you have to grow your wealth.
Conclusion
Starting your investment portfolio can be challenging, but with the right advice and a bit of market savvy, you can make an investment plan for your future, and take care of your wealth the right way. You can also use a bit on the side to make those major growth moves as you continue to invest.
How did you start your investment portfolio? Do you have any specific tricks for getting the most out of your initial investment? Share your tips in the comments below.
