Easy Portfolio Designs You Can Implement No Matter Your Investments
If you’re looking for advice on portfolio strategies, you don’t have to look far. There are recommendations for virtually every type of asset available, which makes it sound like your portfolio needs to look like something only a hedge fund manager could run. While portfolio design can get complicated, it doesn’t have to be. There are lots of easy options you can emulate, no matter how much you have to invest.
Before you put together a portfolio though, you’ll need to first identify what your investment goals are, what your timeline is and how much risk you’re willing to take on. For our purposes, we’re going to assume you have a long time horizon and can afford to take on a little more risk. If that doesn’t sound quite like you, just take our designs and modify them a little to reflect a more conservative approach.
Portfolio Design 101:
In this section we’re going to look at three different levels of investment design, ranging from under $10,000 to more than $250,000.
Designing a portfolio with $10,000 or less
If you’re just starting out, you probably don’t have a lot of cash to throw around just yet. But don’t worry, that doesn’t mean there isn’t a strategy to help you get there. At this level, trying to trade stocks is probably going to be too risky. Instead, concentrate on finding one or two no-load mutual funds to help build your investment base. A fund that specializes in large cap growth is usually a must-have pick leaving you the option of something else to round it out – just make sure you don’t choose something too restrictive like a sector fund.
Designing a portfolio between $10,000 and $100,000
Once you finally hit the $10,000 threshold, you can start to think about trading stocks individually in a brokerage account. You may choose to sell stock mutual funds and invest directly yourself, or you can choose to double up and keep both. You might even mix up the two – keeping a portfolio of domestic stocks in your brokerage, while trusting international and bond investments to mutual funds. If you’re feeling confident about your trading ability, you can even pick up options as part of your investment strategy.
Designing a portfolio with $100,000 or more
Once you accumulate more than $100,000 in your investment portfolio, diversification becomes more important than ever. Keeping assets spread out not just in terms of stock sectors, but account types will ensure a smooth running portfolio. Having a brokerage account, 401K, IRA and an emergency savings account is a great basic set-up that will keep you on track toward retirement.
Keep in mind that these suggestions are only that – suggestions. There’s nothing wrong with changing them to suit your specific needs or desires. For example, if it’s important to you to keep a part of your portfolio in gold, then always having a small 5 percent gold portfolio along with everything else is perfectly acceptable.