For an investor, building an investment portfolio is the first step to achieving long-term financial security. When done right, a robust portfolio containing numerous profitable assets such as a premium house and lot for sale has the potential of generating enough funds to provide a high standard of living for you and your family.
If a beginner investor goes into the process of creating an investment portfolio with little to no idea on how to do it properly, it would most likely lead to financial disaster. For example if you were to hypothetically put your eggs in one basket when assembling your investment portfolio, such as choosing to buy and rely on on type of asset, there is a high likelihood of you losing money in the case of an event crashing their value on the market. There is also the risk of possibly investing in an investment scam, an issue that is prevalent among new investors who lack the necessary knowledge and experience to differentiate legitimate deals from those that sound too good to be true.
For those who wish to learn some basic advice on how to build an investment portfolio for themselves, below are three tips to remember and follow.
Knowing Which Assets to Invest In Can Help You Plan the Content of Your Finance Portfolio
A good investment portfolio is a collection of a variety of assets within multiple classes. Being aware of these ‘asset classes’ is an essential step into becoming a smart investor, since it allows for the formation of a portfolio capable of remaining viable in the long-term.
For starters, it is best to familiarize yourself with the types of asset classes like stocks and bonds that are out there which are available in the market. By learning more on how they work and what their advantages and disadvantages, you can then determine how your asset allocation and future purchases would proceed once you start investing. Gaining the necessary familiarity about the nature of each asset classes can then make you more confident as to what exactly your investment portfolio would contain, a skill that would only grow the more in tune you become with the ever-changing conditions of the market.
It is also wise to investigate the many subgroups that are associated with all asset classes out there, since that can provide a further avenue for diversification once you start to getting more into establishing your investment portfolio.
Being Aware of Your Risk Tolerance Can Significantly Influence How You Build Your Portfolio
To invest is to take risks with your funds to achieve financial freedom, and everyone has their own limit as to how much risk they’re willing to take. A factor that must be considered when building an investment portfolio is your risk tolerance, since this facet of yourself will determine what types of assets you’ll be more likely to include in your portfolio.
For example, if your risk tolerance is high and you’re more than willing to stake your funds within high-risk, high-return short-term investments, then you may consider basing your portfolio mostly around stocks (60-80%). To those who may have a lower risk tolerance and can’t afford to lose a sizable portion of their money away, going for more stable alternatives such as bonds and cash equivalents can provide a more stable, if less profitable (in the short-term at least), form of investments. Depending on your current financial situation, you can choose to adjust your asset allocation and see what fits for you, an occurrence that is more than likely to happen the more time you spend familiarizing yourself with your portfolio.
It is important for any investor to be intimately familiar with their risk tolerance and how to temper their expectations, since this skill can make the difference when it comes to making the best investment decisions or the worst ones.
Determining Your Time Horizon Also Plays an Important Role When it Comes to Building an Investment Portfolio
Time is a major element to account for when studying how to build an investment portfolio, since it can determine what kind of assets you’d choose to include within it. Your age in particular can be an indicator as to which asset classes you’ll be centering around, but this is of course not an absolute rule.
Younger investors in their 20s might choose to double-down on riskier investments since they can afford to do so given their longer time horizon. Older individuals on the other hand may choose to rely on stabler assets within their portfolio, since they would be facing the opposite circumstances in terms of their time horizon. A longer time horizon also comes with the advantage of establishing a portfolio containing investments that would pay dividends the long-term as well, if you prefer a safer choice.
Since time is a finite resource, being able to manage how you can manage your time horizon properly can be the key to attaining a profitable portfolio for the benefit of yourself and your loved ones.
Conclusion
Building a portfolio is a process that requires quite a bit of research and financial savviness. You must consider concepts such as asset classes and asset allocation, the importance of understanding your own risk tolerance, and time horizon as well so as to build the ideal portfolio for yourself.
One of the most common components of an investment portfolio that are also tried-and-true assets are real estate, which is not only stable in the market but is also highly profitable. If you want to add a premium lot for sale as one of the keystones of your portfolio, an excellent choice would be looking to invest in the many properties available from Crown Asia.
Having been a major player in the real estate market for more than 25 years, Crown Asia has established itself as a leading brand when it comes to providing upscale homes for the upper-middle class Filipino. One of their top developments include the Bacoor-based Citta Italia private subdivision along Molino Boulevard, home to a great selection of two-story residential properties that make for either an excellent home for your family or as a fruitful investment to add to your burgeoning portfolio. Crown Asia also has a line of condominiums available for those who want to own property located within the major cities of Luzon, such as Pinevale in Tagaytay, and Hermosa in Las Piñas.
If you’re building an investment portfolio and are looking to invest on a valuable lot for sale in Cavite or Manila, contact a Crown Asia agent and inquire today.
