5 Tips for building your investment portfolio

Building your portfolio is the first step to make sure you get the most out of your investments. However, building a successful investment portfolio is not an easy task, especially for the first-timers.

So instead of following the old try-and-test strategy follow these tips to easily build your successful investment portfolio.

1. Set clear objectives for your investments

Whether it’s something short-term like a vacation abroad or a long-term such as a child’s education or retirement corpus, you need to decide on what financial goals you want to achieve from your investments. This will give you choose the right to investment options to meet your financial goals. Depending upon your goals your portfolio will look and perform differently over any timeline.

Knowing your objectives is important in terms of getting desired returns. Otherwise, your investment will like the ship sailed in the sea – with no direction and no purpose.

2. Select high-quality funds

Once you are clear with your financial goals the next step is choosing the asset allocation strategy. Whatever types of funds you choose, it is important to populate your strategy with high-quality funds. You can check through various portals online for the better performing funds in every category. Funds with high CRISIL ranking are usually better performing and yield higher returns.

3. Choose your asset allocation

While you have done your research and selected the high-quality funds to invest in, the next thing you have to do is decide how you will be spreading your investment across different types of investments. According to your investment goals, you can choose to spread money across equities, bonds, property, cash, and absolute return funds.

4. Diversify

Different types of funds come with different return percentages as well as risk factors. Over time, these funds will also perform differently. So instead of investing a large sum in one type of fund, try to diversify to reduce the risk and widen the opportunity to get more returns. Diversifying your portfolio doesn’t mean only spreading investment across different types of investments. You can spread the money and the risk across different sectors, industries, and geographic regions.

5. Monitor your portfolio

Investing in mutual funds has its perks. One of them is your funds being managed by the professional fund managers. However, you should monitor your funds and overall portfolio performance periodically. This is because your asset allocation may drift over time. Or sometimes initially strong funds can require reassessment as they may deteriorate or due to other factors like the fund manager leaves a job.

The strong, diversified, and successful portfolio is the key to getting the most out of your investment. So take your time and follow these tips when building your portfolio. So you can relax later and enjoy the desired returns from your investment over time.