An investment portfolio represents your capitalization strategy. Through it, you diversify the risk, compensating the reactions of the market.
“How can I create my investment portfolio?” It was the question that a client asked me during a financial advisory session. It is possible that you have also formulated it for yourself. This is why in Finance & Projects I want to discuss how you can create and develop this successful portfolio for investment.
Defining my investment portfolio
The investment portfolio represents a series of financial instruments or products ((shares, time deposits, etc.) that are part of any capitalization strategy that any person is carrying, and are composed of two large groups of assets: Fixed income and variable income.
The first (variable income) are those that respond with a higher level of sensitivity to fluctuations in the market and the results of the companies, while the latter (fixed income) maintain certain levels of “guarantee” in terms of the agreement that has been made.
Now, when it comes to defining the portfolio, in reality what is being done is finding an answer to the question: Where do I invest my money? Because what you are looking for is to know what to invest and how to do it properly. Something that can go from buying stocks to founding new companies. In that sense when defining a portfolio, what you should take into account is to identify in what you are going to put your money to produce more efficiently and profitably to do it for you.
Types of investments
Taking into consideration that when defining a portfolio you answer the question about where you will put your money. There are different types of investments you can make. Starting from your financial capacity as well as from where, geographically, you do it.
Since it is not the same to make investments in Mexico through the Mexican stock exchange that investments in Argentina. They are two completely different contexts that respond in a particular way to the local and global economic realities.
Therefore, you should always think, when making a decision of this type, that not everything you do in terms of investment applies to all contexts, and if you want to be successful, you have to think, for example, of a broker that assists you in the process to choose the best investments, the best investment funds, and many other issues related to the capitalization that you want to do, based on your interests, your abilities, and evidently, the reality From the market.
However, and to make it very practical, here is a list of what are some types of existing investments that you could access:
- Foreign exchange
- Raw Materials
- Time deposits
- Alternative investments
- Real estate
- Stock indexes
Guidelines to build a successful investment portfolio
Starting from the implications related to investments, the million dollar question is how, finally, to build a successful investment portfolio. It’s the one that manages to materialize the objectives of generating benefits in a customary manner.
It is important to highlight, before providing you with these guidelines, that in this there are no absolute guarantees. In fact, one of the main elements that you have to take into account when implementing your investment project is risk; which measures the possibility of the opposite of what is planned.
However, by considering these guidelines, you minimize both the impact and the levels of risk you are assuming; which means that you increase your levels of financial success, resulting in a better financial performance.
Define your risk profile
The first guideline I want to share with you is perhaps the most important one within the context of any investment portfolio since it is linked to diversification. In other words, how to distribute or balance the different financial instruments according to the risk so that the overall result is positive.
Note that in a portfolio there are several individual instruments with different levels of risk, therefore, within the strategy that you develop you have to compensate them so that the final results are in accordance with your expectations.
This means that not all your instruments can be high risk, nor all low risk. But you have to make a combination of them together so that between, high, moderate and low, you can generate benefits. This proportion could be done arbitrarily, but it is best to adjust to a detailed analysis of the risks involved.
Choose times according to your goals
The second guideline has to do with objectives and times. It’s something to which not everyone pays attention because they tend to focus on profitability and risk. However, when you carry out an investment analysis and do not take into account the time and objectives, then you are missing a leg to the table.
When talking about times and objectives and how they play a preponderant role in everything that has to do with your investment portfolio, I mention that there are short-term and long-term investments. And that each of them is focused on a particular type of benefit.
In the case of those that are short term, they tend to have a higher level of risk and therefore greater benefits; while on the long-term side, the look is towards lower risks and lower benefits.
In that sense, in the process of diversification, you have to see the way in which your terms and objectives fit together, because if what you are looking for is fast and high money, then the long term is not your option, and vice versa.
Familiarize yourself with the world of investments
Finally, you have to familiarize yourself with the world of investments. You cannot be oblivious to this reality because everything is related to the volatility of the markets. This does not mean that you have to walk with a newspaper (physical or digital) everywhere, and watching all the news specializing in investments because not even those who live from it do so. It is, above all, that you are aware of what is happening with the sector where you are investing.
It is true that you need a broker to make your investments since you are not directly doing them; however, every decision you make must be made by your broker. Therefore, for you to have a better performance, it is necessary that you get soaked of all the information you can.
In fact, you have the option to manage simulators of online investments, with which you can carry out, in real time, movements of investments and realize how this works in the world of financial markets. Therefore, if you want to be successful in your investment portfolio, you have to include a section related to familiarizing yourself with the world of investments.
An investment portfolio represents your capitalization strategy. Through it, you diversify the risk so that you can compensate for the different reactions of the market, in order to generate benefits in your personal financial management.
In that sense there are different types of investments that you can carry out; you must have certain guidelines to build a successful investment portfolio. Between them:
- Define the risk profile.
- Choose times according to your goals
- Familiarize yourself with the world of investments.
This is not a guarantee that everything will be rosy; however, you can minimize the risk levels that translate into better financial performance.
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