How to build a killer investment portfolio

As you might have guessed, creating a killer investment portfolio requires a lot of preparation and planning. Picking the right stocks now can minimize problems later. It’s also the best way to ensure you grow your capital to its greatest potential.

First, ask yourself three simple questions. First, do you think long-term investing is better than short-term investing? Second, do you think marketing headlines have diminishing returns? Third, do you think stocks can outperform bonds over the long term? If you answered yes to all three, you can start working on your portfolio.

Here are five key things to think about as you build the best investment portfolio money can buy.

(1) Find out what you want to achieve.

Setting goals is a great way to find out what types of stocks and assets are performing best in your portfolio. If you’re looking to build a nest egg after retirement, investing in low-risk stocks and real estate is a good idea. These are less volatile and the profits are stable. On the other hand, if you’re looking to make a significant amount of money quickly, look to riskier stocks that can generate high returns in a short amount of time.

(2) Decide on the time factor.

Time is always of the essence. If you take a long-term view, you can embrace a few more volatile assets. Time can smooth out the risks because you don’t need the capital back immediately. However, if you’re saving for something much more immediate, you may need to avoid risky investments. You don’t want to risk your money and lose it all on a risky bet.

(3) Find out your risk comfort zone.

Not everyone has the same risk tolerance. Some people can handle risky investments without batting an eyelid, but others will spend nights sleepless and anxious. You have to be honest with yourself about this. Pretending that you’re okay with risky investments can backfire. Since the goal is passive income, it’s important to create a portfolio that will grow without increasing your anxiety.

(4) Diversify your asset types.

Don’t just rely on stocks and bonds. Diversifying your wealth counteracts the fear-inducing effects of volatility. You should also consider alternative investments such as real estate, direct ownership, private equity and commodities.

(5) Consider your liquidity needs.

If you do not need the capital so quickly, you are welcome to invest in tangible assets such as real estate. Otherwise, you’ll need to consider more liquid assets like stocks. This allows you to withdraw your investment quickly if necessary. Lack of liquidity means you have to commit. Make sure you think this through carefully before deciding on the assets for your portfolio.

(6) Heed trends but have conviction.

Many trends are emerging all the time. While you need to keep an eye on these trends so you can update your portfolio from time to time, it’s important not to jump on the bandwagon immediately. Evaluate which asset or stock is the hottest right now, but don’t invest in it unless you’ve done reliable and proper research. Portfolio maintenance should be fairly low after initial setup, but you’ll need to rebalance your allocations from time to time.

(7) Seek expert advice.

A financial expert can help you navigate the toughest decisions. Get advice on evaluating the many different investment vehicles to choose from. Just remember to always be open with your personal opinions and concerns. A good advisor should be able to take your concerns into account and help you build the best possible portfolio.