What do you mean by an investment portfolio? Well, a portfolio is simply your collection of different investment assets. Some example of these different investment assets are stocks, bonds, real estate, land, vehicles, boats, etc.

Now you can really understand that a portfolio does not simply contain stocks and bonds. However in this article, we will be talking briefly about the two different types of decisions an investor makes in deciding how to actually create a portfolio.

Asset Allocation Decision

The first decision type is asset allocation decision, and it simply means that you are placing your eggs in different baskets and thus diversifying your portfolio. The second decision is called security selection, which is the choice of specific securities within each asset class.

Depending on your age, family size & income, and other things, your portfolio will change. A rich man living in south Florida might consider investing heavily in land and boats, while boats might be a useless investment for someone living in the center of the United States.

I recommend you take a sheet of paper and write down some of your short term and long term goals to determine what types of investment assets you want to add to your portfolio.

For example, if you are 24, then you are probably going to take higher risks than a senior citizen who is 70, retired, and needs a stable monthly income.

For beginners in the investment field, stocks and bonds are the way to go, because land and properties require a large amount of money. You should always invest your money into 3-5 different investment assets to steer away from any major volatility in your portfolio.

Conclusion

A final tip when investing and creating your portfolio is about the stock market. Even though this is 1 of your other investment assets, you need to diversify even within this investment asset. You should invest in at least 3-5 different business sectors to keep the volatility of your stock investments low.

Well, these are the tips that will help you build a great diversification of investment assests. 

Hope it helped.

Relevant Reading :
All About Dividend Investing: The Easy Way to Get Started : ~ Don Schreiber and Gary Stroik

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