How to Start an Investment Portfolio

An investment portfolio may be a combination of stocks, bonds and tangible assets — such as real estate. Starting an investment portfolio as soon as possible is the most important step toward earning a significant return from your investments. Waiting until you have enough to make a large initial investment might keep you waiting forever. One of the critical factors in investing — in a large way or a small way — is an action-oriented mindset.

Begin building an investment portfolio by determining how much of an initial investment you will make. Start by placing cash in a savings account or some other interest-earning account that will separate your investment from the rest of your money.

Set goals and a timeline. An investment portfolio that looks forward to retirement requires a date for when you hope to retire and some idea of how much money you will require in retirement. If you are planning to use investment earnings for a purchase, you must ensure that the funds will be available when necessary. These decisions will help you identify the right investments.

Determine the type of assets in which to invest. Asset classes include stocks, bonds, mutual funds, index funds, CDs, Treasury notes, commodities, cash, money market accounts, foreign currency and real estate. Each type of asset has different features and qualities and is used to accomplish different objectives. Research each type of investment before buying to determine how that asset fits in with your goals and objectives.

Open an investment account, which will be necessary in order to buy many types of assets. The type on investment account you open should also be determined by the investment strategy and goals you have outlined. It is important to take tax considerations and fees into account. If you plan on saving for retirement, choose a tax shelter account, such as an IRA. Online discount brokerage accounts are an inexpensive and easy way to invest in stocks, bonds, mutual funds and index funds. Brokerage sites offer retirement accounts as well. Some sites even offer currency and commodity trading.

Research fees structures carefully. Fees purchasing or selling securities will have a dramatic impact on the overall return of your portfolio.

Begin making investments. Transfer the funds you set aside to your brokerage account. Carefully begin buying the assets you have outlined in your investment strategy. Investments can be made all at once or can be made over time through reoccurring payments. Setting aside a small amount of money once a month is a good way to build an investment portfolio through savings.


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