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Investment Portfolio Tips for Beginners

April 24, 2023

When you have minimal financial experience, the word “investing” can be daunting, and building an investment portfolio might sound even scarier. An investment portfolio is a collection of assets, including stocks, bonds, mutual funds, and exchange-traded funds. It’s not a physical portfolio but a conceptual one— all of your investments live together under one roof.

The thought of handing your money over with no initial payoff is absolutely nerve wracking, but by using some universal tips as guidelines, investing can quickly become a possibility for you, even if you are a beginner. 

1. Identify your personal investing goals. 

Before you invest, figure out why you want to invest. When do you hope to use the money? What will you be using it for? If your child is starting high school and you are starting to invest for their college costs, your investing strategies will be very different than if you’re 25 and starting to invest for your retirement 40 years down the line.

2. Decide how much help you want with investing.

You can always “do it yourself,” but if you are a beginner, Client 1st Financial recommends seeking help from a financial professional. At Client 1st, we can understand your personal situation, objectively recommend an appropriate investment strategy, and help you responsibly allocate your funds.

3. Understand your risk tolerance. 

Investing inherently involves risk, so you must ask yourself: “How comfortable am I with risk-taking?” Different types of investments have different levels of chance and differing potentials for higher returns. If you are a risk taker, you might want to put more of your money towards stocks, which have value highly dependent on uncontrollable external factors. Bonds could be your best bet if you want to play it safer. Again, these are answers that will be easier to discover with the help of a financial professional, like those at Client 1st Financial. 

4. Build a diverse portfolio. 

When you’re investing, you never want to put all your eggs in one basket. Don’t allocate all of your funds towards one investment because, if that investment goes south, your entire portfolio is going south. By putting smaller amounts of money into multiple different types of investments, your chances for higher returns increase. 

It can be a good idea to research model portfolios to decide what the best asset allocation will look like for you. By incorporating what has worked for others, accounting for your situation, and discussing with a financial professional, you will likely find a good balance for your needs. 

5. Monitor and rebalance your portfolio as needed. 

Over time, your chosen allocation may fall out of whack, meaning percentages will shift, and certain investments will take up more space in your investment portfolio than you originally intended. When this occurs, it’s important to rebalance or restore your portfolio to its original picture. 

For beginners, a good rule of thumb is to rebalance at set time intervals, such as every twelve months, so that it doesn’t fall out of memory. Another way to rebalance is to set a standard that you’ll rebalance when one asset class shifts by a set percentage, such as 3%. 

This is just a short list of tips on how to get started with building your very own investment portfolio, and there are thousands of others. Ultimately, your investment experience is your own, and you must make decisions with your own unique situation in mind. Remember, investing is a journey, not just a destination. Whether you are planning retirement, estate, legacy, or charitable financials, Client 1st is ready to provide you with expertise and an understanding of what investments make sense for you. For professional financial assistance, contact Client 1st Financial here.