Choosing to acquire investments is more complicated than buying assets at random and hoping for the best. There’s a lot of hard work that goes into creating and building a viable portfolio. By keeping a few key factors in mind, the odds of coming up with workable investment plans are much higher. Here are some points to ponder closely.
What are the Goals for the Portfolio?
People choose to invest for a number of reasons. Some are seeking to build wealth that will make the retirement years more comfortable. Others want to create assets that generate enough returns to pay for the kids going to college. Others plan on eventually buying and paying for homes with the returns. Setting specific goals for the investment activity will make it all the easier to identify what kind of assets are worth considering.
What Risks Will the Investor Assume?
As any investment planner will attest, some holdings come with little risk. Others will carry a great deal. It’s important for the investor to determine how much risk is involved with an asset and if the potential returns are worth it. In many instances, the goals of the client will have some bearing on how many safer assets to acquire and how often to sink money into an investment with a higher rate of volatility.
An expert will likely recommend that the novice investor starts by investing in relatively safe investments. These may be stock options that tend to perform consistently even when the economy shifts. Bonds are also considered assets that come with a lower level of risk. The goal is to create a solid foundation that will yield modest, but reliable, returns. Once that foundation is in place, considering riskier options is a possibility.
Keep in mind that even investors who have been playing the market for decades still seek advice from experts. The new investor would do well to find a trusted professional and ask for help in getting started. While it may mean taking it slow at first, the guidance coupled with the knowledge that a consultant provides to the client will prove invaluable in the years to come.