Investment portfolios help us to keep our assets, whether they are banknotes, coins, cards, or stocks and bonds, together and stored. It even allows us to see our economic or financial situation at a glance. And beyond its function of bringing together a series of assets, the investment portfolio is a way of understanding investment, according to the profile of each individual while seeking to meet time and diversification requirements that maximize its value. Therefore, it is vital to understand how to create an investment portfolio.
What is an investment portfolio?
An investment portfolio is the set of financial assets held by an individual. The objective behind its construction is to maximize investment returns by diversifying risk among different financial products, such as stocks, bonds, funds, currencies, etc., so that if one sector or type of asset performs poorly, others can perform better and compensate for possible losses.
How to create an investment portfolio?
If you are thinking about how to create an investment portfolio, you must understand that it is not a simple task, although it may seem so, since it is configured according to each profile and also to the market situation. In addition, it must contemplate basic characteristics: time space; liquidity or diversification, so that the portfolio is not fragile and can cause the loss of our savings.
Despite its complexity, if you want to know how to create an investment portfolio, the best thing to do is to follow the steps below.
Define your investor profile
Before you go any further about how to build an investment portfolio, you should consider how much risk you are willing to take. This mainly involves whether you are able to sleep well even if you know you are losing money (for example, if you lose half of your capital) and whether you can afford to do so.
Depending on the answer, there are three general profiles: conservative, moderate or medium and aggressive. Thus, the first will be willing to take more risks (which could translate into losing more money) in exchange for the possibility of higher returns. The second has balance, and the third seeks to preserve capital.
If you are not clear about which group you fall into, do not worry, as there are tools that will be very useful for this step and to help you create an investment portfolio.
Define your objectives
Another fundamental part in the process of how to create an investment portfolio is to consider what we want to achieve with it. The answer will usually be to have money for retirement or simply to get the most out of savings, among others. Depending on what your answer is, another important question will also be answered: How long do I want to achieve that goal?
Thus, the longer the time frame, the greater the investment possibilities and the lower the risks. You can, for example, consider including a fund with a specific non-guaranteed return objective to diversify your investments and potentially obtain higher returns. On the other hand, obtaining a high return in the short term typically involves high risks. In any case, a good investment portfolio should combine both long- and short-term products, as well as more and less conservative assets.
Hedge your investment portfolio: diversify assets to avoid risks
An intrinsic characteristic that every investment portfolio must have, regardless of the profile, is that it must be balanced. This means that our savings should be spread across different assets, so that we do not have the risk concentrated in one place. The best way to achieve this is what is known as diversification, i.e., investing in different products with different characteristics.
Taxation and commissions
Along with everything else, if you are following the steps on how to create an investment portfolio, you still have the last one: reduce as much as possible its cost. That means taking into account the taxation attached to each product and the commissions to be paid. Regarding the first point, there are products with which you will be able to defer the payment of taxes, such as mutual funds or target return funds. In the case of the second, you will have to assume some kind of fee for the custody of the assets, the maintenance of the portfolio or simply for the operations you carry out. That is why it will be essential to know how to choose the financial intermediary.
Platforms that will help you create your investment portfolio
As you have seen, learning how to create an investment portfolio can be quite a challenge. Firstly, because you not only have to know yourself, but also the market and its products. In addition, a portfolio is not a static element, but needs continuous maintenance that involves rebalancing positions, looking for new opportunities or making decisions about the ones you have. Therefore, to cope with these difficulties, either by time or knowledge, there are many tools that can help you.
The investment platforms that can help you the most when it comes to creating and maintaining an investment portfolio are the so-called robo-advisors. These are automated managers that do all the work according to the profile and needs of each user and at a very competitive price. Thus, you can forget about how to create an investment portfolio.
Create an investment portfolio with inbestMe
Among these platforms, called robo-advisors (automated managers), inbestMe stands out. In this case, if you want to create your portfolio, you can do so at a very competitive price. Thus, to take the first step, you must first open an account and answer a series of questions that will help the platform’s algorithm to place you within a profile. It will also help you define a goal.
Once you have taken that first step, then it’s time to set up your portfolio. The inbestMe advisory team will help you in your choice, as they are in charge of configuring and supporting the algorithm that will propose investment options. In this case you just have to choose the one you like the most, the one that best suits you or simply one of those offered and see how your money grows in the long term. In addition, the platform itself will take care of keeping your portfolio updated and balanced, so you will not have to worry about how to create an investment portfolio. What are you waiting for?
