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How to Build an Investment Portfolio
How to Build an Investment Portfolio
Investment Portfolio and How to Build One

An investment portfolio is simply a collection of financial investments or assets that you own, with the aim of trading later on to realise a profit. Hopefully. 

Assets can be stocks and shares (financial investment into a business or enterprise), or ‘tangible’ assets – things that have a physical form like gold, art or cars. The common theme is that you buy at one price and wait until the value rises, then sell on to other traders.  

To Invest, or Not to Invest, That is the Question?

And the answer is, ‘it depends on your financial goals.’ 

Setting realistic goals will help you decide what the most suitable investments are for you, in terms of risk and time spans. 

So, do you want a short or medium term investment, where you can take your money out relatively quickly? Or can you leave your cash invested for longer? Maybe you don’t need it until you retire? 

Setting a time period will inform the level of risk you might be comfortable with. If say, you are retiring in 25 years time, you may be happy to ride the fluctuations in the stock market, choosing your time to sell when your stock peaks. The longer you invest, the better potential for growth.  

Alternatively, you may be more comfortable only tying up your capital for 5 years. In which case it would be prudent to opt for lower risk investments to minimise short term loses. Although, the scope for profit is reduced, so is the risk.  

With either scenario, it’s best not to gamble the family silver but to only use funds that are not vital to your lifestyle.  

DIY or Get Help?

There are plenty of online platforms that give you access to buying and selling stocks and shares, and if you’re digital savvy, it’s a secure way to go. It’s a cheaper option and you’ll have control over your own investments.  

However, a novice might feel more comfortable with some expert guidance. An independent financial adviser will help you navigate the landscape and a good one should also ask lots of question to determine your appetite for risk.  

Bear in mind, a professional advisor isn’t protection against losses, and they can’t guarantee anything, but their advice may mitigate any obviously poor decisions. They’ll charge you for their expertise, but you’ll possibly recoup the cost as you side step all the research you’d need to do yourself.   

How Much are Investments?

As a rule of thumb, investing a larger lump sum will net you a larger return, but you’d need to be in it for the long term. Not everyone has access to piles of cash hanging around though, so smaller investments, spread over a range of assets might be less risky, if that’s the case.  

And if the market experiences a down turn, the percentage losses are less terrifying than if you’d invested a significant lump sum. 


When assembling your portfolio, diversification will help to reduce the impact of any huge losses that occur in a particular market. It’s a case of not putting all your eggs in one basket. No one can safeguard against recessions and crashes, but judicial entrepreneurialism should be applied, unless you can afford to be laissez faire with your capital.  

Investing in a range of assets, sectors and markets should smooth out any exposure – if one investment underperforms, you’ll have others to bolster the loss. 

Having different types of assets in a portfolio is also a common strategy for investors and is known as ‘asset allocation’. 

Normally, a diversified portfolio will include a mix of stocks and shares plus other asset classes, such as commodities or property. 

Many investors are including collectables like wine and spirits in their arsenal and recent gains look attractive. It’s very much worth keeping a wider view and keeping an open mind about trends on the horizon.  

Health Check

Once your portfolio is up and running, it should be maintained and regular checks on performance made. Swap out any seriously underachieving investments and keep an eye on what’s doing well and for how long.  

Also, have your circumstances changed? If suddenly having lots of capital tied up is impacting on your lifestyle, it may be time to re-think the balance of your portfolio. Remember, it should work hard for you, not the other way around. And it should be rewarding in more ways than just financial gains. 

Happy Investing! 

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