Want to earn more money from your investments but don’t know how to start? In an era of economic difficulty, it is particularly important to invest your money wisely so as not to lose it. 

It doesn’t matter how much cash you have in your pocket or bank account. Just realizing alone that investing is an excellent way to grow your money, is already a huge step.  

If you’re serious about investing and would like to know more about the process and how to ace it, then this article is for you. Read on to discover the four best tips for building the best investment portfolio. 

1. Define Your Investment Goals

What do you want to achieve? Do you want to grow your wealth, preserve your capital, or generate income? Once you know your goals, you can better select the investments that will help you achieve them.

At this stage, you’ll also want to set a timeframe for when you will need to have access to your funds. This will help you decide on the right mix of investments.

A longer timeframe will allow more risk, while a shorter one will require a more conservative approach to investing.

2. Diversify Your Portfolio

A diversified investment portfolio is one in which you invest in a variety of asset classes, such as stocks, bonds, and real estate, or industries like technology, finance, and healthcare.

Imagine putting all of your funds into one asset or industry. If it performs poorly, all of your money is at stake. 

If you diversify your portfolio, you can easily recover losses from one underperforming asset or industry with your gains from the rest of your investments. 

That said, it should be easy to surmise that you need a diversified portfolio for risk management purposes.   

3. Decide on Your Risk Tolerance

Your risk tolerance is the maximum amount of losses that you are comfortable incurring from your more volatile investments.

A financial advisor can give recommendations or suggestions for building a good investment portfolio, but risk tolerance is something you and only you can decide on.  

Once you know your risk tolerance, you can start building a portfolio that meets your needs. This will be diversified across different asset classes and industries, depending on your defined risk tolerance.   

4. Review Your Progress

Remember to make it a point to review your progress to ensure that you’re still on track with your goals and that areas requiring improvement are getting the attention they need.

In light of that, set aside some time each month to go over your portfolio and check how you’re faring against your investment goals. 

You’d also like to compare your progress from one month to the next with relevant benchmarks. Reconsider your pre-defined risk tolerance and make sure that you’re still comfortable with it.

Don’t forget to take your taxes into account. If you have questions on this, find your answers with WealthAbility and see how they can also help you reduce your taxes in no time!

Build Your Best Investment Portfolio Today

There are many different ways to build the best investment portfolio, but the above are the big four steps you can take—the most proven, classic ways of making a successful start as an investor.

You should also expect to encounter other tips and advice as you roll with your investment journey. The important thing is to keep an open mind and learn from your mistakes. 

Looking to build your knowledge some more? We offer more useful articles just like this one. Keep reading and you won’t be disappointed!