Building a Stock Portfolio To Meet The Investment Goals

When it comes to building a stock portfolio, it is very important to understand the investment goal, and considering how much time is devoted to do the monitoring, the amount of money you have (as suppose to suffer financially if thing goes against yours positions) and how much risk ones are willing to take when investing in the stock market. These two later is similar, just want to emphasize it rather to regret it.

There are many vehicles to do an investments: time deposit, bond, real assets investments, stock, forex trading etc. Stock investments as one of the investment vehicle can help your investment portfolio by providing potential growth, income from dividends or a combination of the two, which is known as return.

However, the value of stocks can fluctuate, and when you sell your stock, it may be worth more or less than you originally paid. When building a stock portfolio, you should carefully consider the risks of investing in the stock market and develop a diversified asset allocation strategy that fits your goals, investing time frame and risk tolerance.

Diversifying stock portfolio is a way to help offset the risk in the stock investments. The goal is to spread out stock investments in different sectors and include different investment characteristics so that when a stock or sector performs poorly, the performance of your stock investments in other sectors may help offset the swings in the total value of your stock portfolio.


Following are some basic tips which can be used to make the diversification:

• Invest in approximately 20 to 30 stocks in at least six to eight sectors with different investment characteristics.
• No more than 25% of the total value of your stock portfolio should be in any one sector.
• No more than 15% of the total value of your stock portfolio should be in any one stock.
• You should invest a minimum of approximately 3% to 4% of the total value of your stock portfolio in each stock.

Deciding which stocks to invest can be difficult, especially if the tolerance for risk is too low or the money which are allocated for stock investment are too low. That's why it's important to develop an asset allocation strategy, research stocks that fit within your strategy and invest in stocks that have the potential to meet your specific goals, whether you want growth, income or a combination of the two. In this points, the "do-it yourself investor" need to make a research to find the best stock for his/ her own portfolio. There are plenty of resources in the internet to learn, the suggestion is do not rush, take it slowly, if the money to invest is too low do not push it, wait till the amount is enough to make a good diversification....