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Successful investing means working towards both short-term and long-term financial goals. But building an investment portfolio to reach both types of goals can be a challenging task.
Whether you’re working with a financial advisor or taking a DIY approach, the following six-step checklist can help you create and maintain an investment portfolio for any goals you may have.
What Is an Investment Portfolio?
An investment portfolio is a collection of assets you buy or deposit money into to generate income or capital appreciation.
Assets include cash on deposit in a money market account or certificates of deposit, real estate or anything you can purchase with a brokerage account—stocks, exchange-traded funds, mutual funds, bonds, crypto and more.
Investment portfolios may involve one or several types of accounts. For instance, your employer’s 401(k) plan is one type. But as you add other goals—like saving for a home down payment or for college—you’ll likely add more investment accounts to your portfolio. Your complete portfolio might include a high-yield savings account and a 529 plan.
It’s important to consider how each type of investment account works separately and in conjunction with each other. Don’t put all your eggs in one basket, because without realizing it, you might wind up investing in the same assets in multiple accounts. As you’re about to discover, not all investments align with all goals—or investors.
How to Build an Investment Portfolio in Six Steps
Building an investment portfolio can be broken down into the following simple steps. Each step sets you up for success with the next step. Ultimately, you’ll have a better chance of building a portfolio that aligns with your investment style and the goals you want to achieve.
1. Start with Your Goals and Time Horizon
When building an…
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