What is an investment portfolio?
Technically a portfolio Investment is a collection or ownership of assets that includes stock, bonds, currencies, or other financial assets with the expectation that it will return or increase its value in the future. When it comes to investment portfolio there’s a lot of factors that need to be considered before you start. First is the category when it comes to building your investment portfolio, it could be a strategic investment or in a more tactical approach. In a strategic investment, it includes buying financial assets which primarily focus on long-term growth potential. On the other hand, the tactical approach is more focused on short-term gains such as active buying and selling activities. Aside from its categories, it is also important to understand the asset classes covered in portfolio investment. Asset classes include stocks, real estate investment trusts, government bonds, corporate bonds, mutual funds, and bank certificate deposits. There is also a physical investment such as real estate, land, art, and jewelry such as gold. To make it simple investment portfolio is anything that can be purchased to earn or generate a return whether it was long term or short term.
Guide in How to build investment portfolio
1. Estimate your risk tolerance
The first thing that you need to do before you start building your investment portfolio is to identify your risk tolerance. Risk tolerance is the ability of the investor to endure the decline in the value of investments. These are the possible financial loss or uncertainty that you might encounter when it comes to investing. This is an important thing to consider before you start your investment portfolio as it determines which investments are ideal for your portfolio.
2. Diversified Portfolio
After assessing your risk tolerance the next thing that you need to consider is to diversify your investments. Technically a diversified portfolio is a collection of various investments that are combined to reduce the overall risk in the investor’s profile. As we all know there’s a lot of risks that you’ll face once you start investing, and one of the best options to consider in order to minimize it is by investing in a wide range of investment types and company. In this way, if one of your investments or company is hit specifically hard by the market, your other investment will hopefully help it and reduce the amount of money you lose in the short term.
3. Tracking your Investment performance
After all the decision-making and once you already have your investment portfolio you must now track the performance of your portfolio asset allocation. In this part, you need to track your investment to ensure that everything is going smoothly towards achieving your financial goals. If your investments or portfolio performance is below expectation when you track it, then you must identify and analyze the reason why it is underperformed. Is it because of a wider economic slowdown or is it due to short-term or long-term factors? Maybe you need to reconsider your asset allocation strategy. By tracking the performance of your investment, you can minimize the possible investment risk and it gives you time to take action immediately.
Types of how to build your investment portfolio
There are different types of financial assets that can be included in your investment portfolio, it may include property, gold, debt funds, exchange traded funds, equity shares, and other financial assets. Having a diversified portfolio will help you to reduce risk and at the same time provides greater returns on your investments. Below is the list of popular types of a portfolio that can guide you to build an investment portfolio.
1. Aggressive Portfolio
This type of portfolio is commonly associated with the term aggressive because it targets a higher return and at the same time undertakes higher risks to achieve the objective. This includes high beta stocks wherein these asset class usually have a higher fluctuation compared to the overall market. This simply means that a high beta stock will move its shares either higher or lower that is almost twice as the market shifts, which also implies that you could either double your profit or total losses. If you are interested in this type of portfolio, you need to have a taxable brokerage account. It is better to target the technology sector which offers huge upswing opportunities. The only important thing to remember when using this is while targeting for the highest return, also make sure that your losses will not outnumber your profit.
2. Speculative Portfolio
The speculative portfolio needs a high-risk appetite, as it carries the highest risk among all types of portfolios. It could also be the technology and health care sectors that are in the process of a breakthrough product. This type of investment portfolio focuses more on how much the investor can sell the asset at a future date and not on the annual income that other asset classes may bring, like dividends or interest payments. To make it simple, the main focus of a speculative portfolio is the price fluctuation in the market.
3. Income portfolio
This type of portfolio focuses more on gaining from different asset classes like investments, dividends, interest, and capital gains. One of the best examples of an Income portfolio is real estate. It grants you a higher share of profits together with favorable tax benefits in return. In real estate, you will commonly earn a profit by purchasing land or property and then selling it at a higher value. There’s a lot of factors that need to be considered in order to increase the value of a certain property. First is the location, this is often the biggest factor in terms of increasing the value of your property. If the location of your property or land is in a very good spot such as near major roads and highways or commercial establishments it will surely increase its value. The second is developing the property and making improvements as it will also guarantee to increase the value of your property. If you are interested in this type of investment portfolio specifically in real estate it will be a good opportunity to consider those factors before you start purchasing a property. Bria Homes is one of the best options when it comes to investing in real estate. Below are the factors to consider why Bria Homes is a good option when it comes to investing in real estate.
Affordable House and Lot
If you are planning to purchase a house and lot for your investments Bria Homes is the best option for that. The packages offered by Bria homes are ranging from 460,000 to 1.5M pesos only. This is a good opportunity to use the property for renting as the house or the property is already developed and ready to occupy. By choosing Bria Homes you can easily have a passive income by purchasing a very affordable house and lot then using it for renting or any other financial earning purposes.
● Good Location – The house and lot offered by Bria Homes are all located near the major roads and highways, commercial establishments, and more places of interest. It won’t be a hassle when looking for any vacant and available land or property that is in a good location because Bria Homes already has considered that for you.
● High Quality and Futuristic style and design of houses – The property offered by Bria Homes is guaranteed to be safe and durable. Aside from the design and style of the house, they are at par with modern architecture which makes it look more elegant and eye-catchy to its clients. One of the advantages of investing here is that you won’t need to worry about the renovation or making improvements to the property as it was already built and well designed.