Investing in different assets is one of the best ways to improve your long-term financial stability. It allows you to build equity over time and diversify your investment portfolio for the best return. However, when it comes to building a portfolio, many people aren’t sure where to start or how to view individual assets under one cohesive system. To help you get the most out of your efforts, here’s how to create an investment portfolio for the long run.
1. Set an Investment Budget
Since many investment portfolios require long-term commitments, you need to make sure that you won’t need to access the money immediately. This is where investment planning comes in. You should have enough money in bank accounts to pay rent or mortgage, bills, medical expenses, and any other essential products or services, so take the time to meticulously track your spending for a few months. From here, see how much money you can realistically invest as a whole so you can create clear investment portfolio objectives. If you’re not sure what you can afford, consider hiring a financial advisor to help manage your money.
2. Consider Your Risk Tolerance
3. Choose Your Investment Accounts
4. Determine Asset Classes Allocation
Once you determine which investment accounts you’re going to utilize, it’s time to determine asset allocation between them. This is where you’ll decide how much of your investment budget to allocate to each asset class. How you split up your portfolio again depends on your individual circumstances and risk assessment. More conservative investors will have a far different allocation than those who are aggressive. If you’re unsure about how you should approach the allocation for asset classes, consider your age, financial situation, and your overall goals. You can also work with a financial advisor to better understand the best course of action for your individual circumstances.
5. Analyze and Rebalance
Working with a financial advisor gives you the expertise you need when creating a long-term investment portfolio that is tailored to your personal risk tolerance. To schedule a consultation with an experienced financial advisor, contact me, William Bevins today at [email protected] or by calling (615) 469-7348.