{"id":6156,"date":"2022-09-01T13:37:07","date_gmt":"2022-09-01T13:37:07","guid":{"rendered":"https:\/\/rakshithpai.com\/?p=6156"},"modified":"2022-09-01T13:37:16","modified_gmt":"2022-09-01T13:37:16","slug":"build-investment-portfolio-from-scratch","status":"publish","type":"post","link":"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/","title":{"rendered":"Build Investment Portfolio from Scratch:"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-662ce0fa73e86\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\" style='display:none' id=\"ez-toc-cssicon-toggle-item-662ce0fa73e86\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#What_is_an_Investment_Portfolio\" title=\"What is an Investment Portfolio?\">What is an Investment Portfolio?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#Portfolio_with_Risk_Tolerance_in_Mind\" title=\"Portfolio with Risk Tolerance in Mind:\">Portfolio with Risk Tolerance in Mind:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#Types_of_investment_portfolios\" title=\"Types of investment portfolios:\">Types of investment portfolios:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#Conservative_Investor\" title=\"Conservative Investor\">Conservative Investor<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#Moderate_Investor\" title=\"Moderate Investor\">Moderate Investor<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#Aggressive_Investor\" title=\"Aggressive Investor\">Aggressive Investor<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#Understanding_Portfolio_Balancing\" title=\"Understanding Portfolio Balancing:\">Understanding Portfolio Balancing:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#7_Steps_to_Build_a_Stock_Portfolio_from_Scratch\" title=\"7 Steps to Build a Stock Portfolio from Scratch:\">7 Steps to Build a Stock Portfolio from Scratch:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#Be_Informed\" title=\"Be Informed\">Be Informed<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#Approach\" title=\"Approach\">Approach<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#Diversified_Investment\" title=\"Diversified Investment\">Diversified Investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#Asset_Allocation\" title=\"Asset Allocation\">Asset Allocation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#Risk-Return\" title=\"Risk-Return\">Risk-Return<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#Think_Long\" title=\"Think Long\">Think Long<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#Trade_Short\" title=\"Trade Short\">Trade Short<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#Conclusion\" title=\"Conclusion:\">Conclusion:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#For_More_Information_Check_this_Video\" title=\"For More Information, Check this Video:\">For More Information, Check this Video:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/rakshithpai.com\/build-investment-portfolio-from-scratch\/#Also_read\" title=\"Also read:\">Also read:<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_an_Investment_Portfolio\"><\/span><strong>What is an Investment Portfolio?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>An investment portfolio is a combination of various assets put together, invested such that each asset with its own correlation, affects one another&#8217;s return.\u00a0<\/strong><\/p>\n\n\n\n<p>The goal of each investor with a diversified portfolio is to earn money through capital appreciation or <a href=\"https:\/\/rakshithpai.com\/best-dividend-paying-stocks-in-india\/\">dividend<\/a> payouts. Your share in portfolio investment must be passive, meaning you do not make management choices, unlike an investment in a firm you actively control.\u00a0<\/p>\n\n\n\n<div class=\"wp-block-buttons alignwide is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-1 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p>Your portfolio may consist of assets such as equities, bonds, mutual funds, and exchange-traded funds that can all be part of varied weightage. Even though a &#8220;portfolio&#8221; is more of an idea than a real place in the digital age of investing, it might be helpful to think of all your assets as being in a single holding.<\/p>\n\n\n\n<p><strong>When determining how to invest your money, you should take into account all of your financial assets at once.<\/strong> This includes your expected return, tax rate, level of risk, and probability of loss.<\/p>\n\n\n\n<figure class=\"wp-block-embed aligncenter is-type-wp-embed is-provider-rakshith-pai wp-block-embed-rakshith-pai\"><blockquote class=\"wp-embedded-content\" data-secret=\"THGfdTCBVv\"><a href=\"https:\/\/rakshithpai.com\/modern-portfolio-theory\/\">Modern Portfolio Theory &#038; Investment Analysis:<\/a><\/blockquote><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;Modern Portfolio Theory &#038; Investment Analysis:&#8221; &#8212; \" src=\"https:\/\/rakshithpai.com\/modern-portfolio-theory\/embed\/#?secret=norANujcMP#?secret=THGfdTCBVv\" data-secret=\"THGfdTCBVv\" width=\"200\" height=\"200\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Portfolio_with_Risk_Tolerance_in_Mind\"><\/span><strong>Portfolio with Risk Tolerance in Mind<\/strong>:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>When putting together a portfolio, one of the most crucial factors to think about is how much risk you are willing to take. <strong>Tolerance for risk is how open you are to losing some of your investment capital in order to potentially gain more in the long run.\u00a0<\/strong><\/p>\n\n\n\n<p><strong>Higher-risk investments have the potential to produce higher returns, but they also increase the likelihood of far larger losses. <\/strong>The largest gains may be found in the stock market, while bond investments help keep your portfolio&#8217;s value stable.<\/p>\n\n\n\n<p>Also, How well you can emotionally weather market ups and downs is directly related to your risk tolerance, which in turn is determined by how far away you are from a financial objective like retirement.&nbsp;<\/p>\n\n\n\n<p>You can benefit more from the market&#8217;s general upward development if your objective is far off in the future and you have the patience to ride out the inevitable ups and downs that will inevitably occur. Before you start creating your investment portfolio, check your risk tolerance to get a sense of how much you can stand to lose.<\/p>\n\n\n\n<p>People who are younger and planning ahead for retirement can mostly invest in stocks because they have time to get back on their feet if they lose a lot of money. As those same investors get closer to retirement and their risk tolerance drops, they might shift their portfolio&#8217;s focus toward bonds.<\/p>\n\n\n\n<p>Having a mix of different sorts of investment accounts is also a smart idea. Investing in a tax benefit scheme, which offers valuable tax benefits, is a smart move for any saver. You might want a zero-brokerage ELSS investor account from which you can invest money at any time without being charged a fee. <strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/zerodha.com\/open-account?c=PR4768\">CLICK HERE!<\/a><\/span><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"ast-oembed-container \" style=\"height: 100%;\"><iframe loading=\"lazy\" title=\"Is your Portfolio in Red? Are you at a Loss!?! Then Watch this Video #PortfolioInRed\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/hlLy8E5Ks_s?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<div class=\"wp-block-buttons alignwide is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-2 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Types_of_investment_portfolios\"><\/span><strong>Types of investment portfolios:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>A model portfolio is a group of holdings that are held by the investor but are actively managed by financial experts. <\/strong>Model portfolios use a strategy called &#8220;diversification&#8221; to get the return they want at a level of risk they can handle. A model portfolio is not ideal for everyone. In fact, when selecting how to invest your assets, it is important to take your level of comfort with risk into account.<\/p>\n\n\n\n<p>A person with a high-risk tolerance and a long time horizon would benefit from an aggressive portfolio, whereas someone with a low-risk tolerance and a short time horizon would do better with a cautious one. <strong>There are 3 types of investors, as follows;<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conservative_Investor\"><\/span><strong>Conservative Investor<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A safe and reliable investment that is primarily preferred by those who are nearing retirement. <strong>Here, an investor chooses to invest over 70% in bonds and other fixed income instruments and the balance of 30% in equity and other risky assets.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Moderate_Investor\"><\/span><strong>Moderate Investor<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This is a common investment type. <strong>Here, an investor invests 50% in equity and the other 50% in debt instruments. <\/strong>Such an allocation is suggested for every class of investor.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Aggressive_Investor\"><\/span><strong>Aggressive Investor<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Preferred mainly by young investors and other risk takers. <strong>Such an investment allocates more than 85% of the portfolio to Equity &amp; other risky assets, while the balance of 15% or less is invested in fixed income instruments.<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-embed aligncenter is-type-wp-embed is-provider-rakshith-pai wp-block-embed-rakshith-pai\"><blockquote class=\"wp-embedded-content\" data-secret=\"0iE7r1fLqe\"><a href=\"https:\/\/rakshithpai.com\/how-to-manage-your-portfolio\/\">How to manage your portfolio?<\/a><\/blockquote><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;How to manage your portfolio?&#8221; &#8212; \" src=\"https:\/\/rakshithpai.com\/how-to-manage-your-portfolio\/embed\/#?secret=r2L933YCTD#?secret=0iE7r1fLqe\" data-secret=\"0iE7r1fLqe\" width=\"200\" height=\"200\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Understanding_Portfolio_Balancing\"><\/span><strong>Understanding Portfolio Balancing:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>An unbalanced portfolio might develop over time if you don&#8217;t rebalance it periodically. <\/strong>The proportions of your portfolio may be thrown off if the value of even a single stock increases. By following a disciplined approach, you can get your investment portfolio back to the way it was before. For more information on <a href=\"https:\/\/rakshithpai.com\/portfolio-allocation-asset-correlation-importance\/\">portfolio allocation<\/a>, <strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/rakshithpai.com\/modern-portfolio-theory\/\" target=\"_blank\" rel=\"noreferrer noopener\">CLICK HERE!<\/a><\/span><\/strong><\/p>\n\n\n\n<p><strong>If you&#8217;re working with a Robo-advisor or being handled by a professional investment management firm, you won&#8217;t have to worry about this, since your portfolio will be rebalanced automatically as needed. For example, your mutual funds are constantly rebalanced to reduce risk and increase returns.<\/strong><\/p>\n\n\n\n<div class=\"wp-block-buttons alignwide is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-3 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p>You may hear from your financial adviser that you need to rebalance your portfolio every six months or a year, or if your allocation to a certain asset class (say, equities) changes by more than a certain proportion. For example, if you are a moderate investor and your portfolio&#8217;s stock allocation went from 50% to 65%, reducing your allocations to risk-free investments like treasury bonds, you might want to sell some of your stocks or make other investments until your portfolio&#8217;s stock allocation goes back to 50%.\u00a0<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/09\/Build-Investment-Portfolio-from-Scratch-1-1024x576.jpg\" alt=\"\" class=\"wp-image-6159\" width=\"1056\" height=\"594\" srcset=\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/09\/Build-Investment-Portfolio-from-Scratch-1-1024x576.jpg 1024w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/09\/Build-Investment-Portfolio-from-Scratch-1-300x169.jpg 300w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/09\/Build-Investment-Portfolio-from-Scratch-1-768x432.jpg 768w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/09\/Build-Investment-Portfolio-from-Scratch-1-150x84.jpg 150w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/09\/Build-Investment-Portfolio-from-Scratch-1.jpg 1280w\" sizes=\"(max-width: 1056px) 100vw, 1056px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"7_Steps_to_Build_a_Stock_Portfolio_from_Scratch\"><\/span><strong>7 Steps to Build a Stock Portfolio from Scratch:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Be_Informed\"><\/span><strong>Be Informed<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Investing in any business is a serious business. Anything we do, we must do with accurate information.<\/strong> The same applies to Equity Investing too.\u00a0<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><strong>\u201cKnow what you own and know why you own it&#8221;.\u00a0<\/strong><\/p><cite>Mr. Peter Lynch<\/cite><\/blockquote>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Approach\"><\/span><strong>Approach<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Once you know how much you want to invest in each asset class as a whole, you can choose the exact weighting of the assets that will go into each class.<\/strong><\/p>\n\n\n\n<p>Currently, many novice investors choose to build their portfolios by selecting stocks and bonds individually or by participating in actively managed mutual funds. This approach, known as &#8220;active investing,&#8221; has a number of drawbacks.<\/p>\n\n\n\n<p>Many new investors make the mistake of taking a pick-and-choose, short-term approach, which puts them at a disadvantage compared to those who take a more disciplined, long-term approach.<\/p>\n\n\n\n<div class=\"wp-block-buttons alignwide is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-4 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Diversified_Investment\"><\/span><strong>Diversified Investment<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>One of the most important things you can do to reduce the overall risk of your investments is to diversify your portfolio in such a way that your investments must be in all asset classes but primarily in those which you know the best.\u00a0<\/strong><\/p>\n\n\n\n<p>And, if you are a fresher with not much experience, then mutual funds and exchange-traded funds (ETFs), which give instant access to hundreds or even thousands of companies, are a good way for new investor to diversify their portfolio.<\/p>\n\n\n\n<figure class=\"wp-block-embed aligncenter is-type-wp-embed is-provider-rakshith-pai wp-block-embed-rakshith-pai\"><blockquote class=\"wp-embedded-content\" data-secret=\"5VaBXs55Es\"><a href=\"https:\/\/rakshithpai.com\/how-to-diversify-stock-portfolio\/\">How to Diversify Your Stock Portfolio<\/a><\/blockquote><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;How to Diversify Your Stock Portfolio&#8221; &#8212; \" src=\"https:\/\/rakshithpai.com\/how-to-diversify-stock-portfolio\/embed\/#?secret=P3hAtf73ZZ#?secret=5VaBXs55Es\" data-secret=\"5VaBXs55Es\" width=\"200\" height=\"200\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Asset_Allocation\"><\/span><strong>Asset Allocation<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Asset allocation is a method used by certain investors of varying ages to further diversify their holdings.<\/strong> Simply put, this refers to diversifying your investment holdings among different types of assets. Among the possible options here are equities like stocks and mutual funds, fixed-income investments like bonds, and liquid assets like cash or CDs.<\/p>\n\n\n\n<p>For more information on Asset Allocation, Correlation &amp; its Importance, <strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/rakshithpai.com\/portfolio-allocation-asset-correlation-importance\/\" target=\"_blank\" rel=\"noreferrer noopener\">CLICK HERE<\/a><\/span><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Risk-Return\"><\/span><strong>Risk-Return<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>You should know the risks associated with various assets before making your first stock purchase. Your risk tolerance will determine how you weigh the many options available to you. <strong>As a general rule, the higher the risk level of an asset, the higher the likelihood that you will suffer a loss if you decide to invest in it.<\/strong><\/p>\n\n\n\n<p>Government bonds, corporate bonds, CDs, and savings accounts are all examples of low-risk investments. Government bonds are often thought to be the safest option because they are backed by the full faith and credit of a sovereign nation.<\/p>\n\n\n\n<p>High risk, high return: equity investing (mainly small and mid-sized firms), mutual funds, and real estate investment trusts (REITS) are all examples of high-risk investments. You risk losing your initial investment because the prices of the underlying assets are more likely to change.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Think_Long\"><\/span><strong>Think Long<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>If you believe that Equity Investing is one of the best forms of investing, then you must also know the fact that long-term investing yields higher returns.\u00a0<\/strong><\/p>\n\n\n\n<p>Investing in stocks, bonds, real estate, or even just keeping cash on hand for more than a year is considered a long-term investment. In search of greater potential returns, long-term investors are often ready to take on greater levels of risk.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Trade_Short\"><\/span><strong>Trade Short<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Short-term trading although risky may be one of the best sources to accumulate capital. The capital will be invested in a much more stable company for the long term.<\/strong><\/p>\n\n\n\n<p>Various short-term trading strategies are used by traders. Some of the best ways to approach trading are either via intraday trading or swing trading.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Maintaining your portfolio&#8217;s diversity is the most important thing you can do as you build it. You need to diversify your holdings inside each asset class as well as across asset classes.<\/strong> Make sure that your investments in a certain class of assets are spread out over a large number of subclasses and market segments.<\/p>\n\n\n\n<p>Putting together a stock portfolio might seem daunting at first, but with these guidelines in mind, you can build a diverse portfolio that serves your unique financial goals.<\/p>\n\n\n\n<p><strong>Before putting your money into stocks, be sure to complete your homework. Knowing what assets are right for you at your age, with your financial objectives, and throughout the course of your investing time horizon is crucial.<\/strong><\/p>\n\n\n\n<p>Putting together a stock portfolio is only the beginning. You should also study more about creating a diverse investment portfolio with the money you save.<\/p>\n\n\n\n<div class=\"wp-block-buttons alignwide is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-5 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p>As we said, mutual funds and ETFs provide good diversification for investors. Individuals with modest savings may now access the same economies of scale enjoyed by major fund managers and institutional investors thanks to the availability of such investment vehicles. So, that\u2019s where you must begin your investment journey &amp; slowly build your portfolio.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"For_More_Information_Check_this_Video\"><\/span><strong>For More Information, Check this Video:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"ast-oembed-container \" style=\"height: 100%;\"><iframe loading=\"lazy\" title=\"How to manage your portfolio?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/wpnCu4rPAB8?start=19&#038;feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<p><strong>Disclaimer: <\/strong>All the information on this website is published in good faith and for general information purposes only.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Also_read\"><\/span><strong>Also read:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><a href=\"https:\/\/rakshithpai.com\/multi-asset-allocation-fund\/\" target=\"_blank\" rel=\"noreferrer noopener\">Multi-Asset Allocation Mutual Fund &amp; Its Importance:<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/become-debt-free\/\" target=\"_blank\" rel=\"noreferrer noopener\">Become Debt Free &#8211; Easy &amp; Quick Way to do:<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/dividend-yield-mutual-fund\/\" target=\"_blank\" rel=\"noreferrer noopener\">10 Best Dividend Yielding Mutual Funds:<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/best-sectors-wealth-creation\/\" target=\"_blank\" rel=\"noreferrer noopener\">7 Best Sectors for Wealth Creation by 2030:&nbsp;<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/futuristic-sectors-invest\/\" target=\"_blank\" rel=\"noreferrer noopener\">5 Futuristic Sectors to Invest in India:<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>What is an Investment Portfolio? An investment portfolio is a combination of various assets put together, invested such that each asset with its own correlation, affects one another&#8217;s return.\u00a0 The goal of each investor with a diversified portfolio is to earn money through capital appreciation or dividend payouts. 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