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What Should You Keep in Mind While Building an Investment Portfolio?

20 June 2022

With a booming economy, low unemployment rate, and increasing access to credit, India is an ideal country for those looking to invest their money. Plus, if you want to invest in real estate or physical assets like stocks or bonds, India has plenty of options available. There are many advantages of investing.

  • First, investing can help diversify your portfolio. You could potentially invest in stocks, bonds, mutual funds, or any other type of investment vehicle. This will help reduce the risk of losing money if one particular investment goes sour while others remain stable.
  • Second, it can increase your assets by growing them over time. You'll begin by contributing a small amount per month and then slowly add more funds as they are deposited into your account each month until they reach a point where they can be withdrawn at any time without incurring fees or penalties. The more money you deposit into an account each month (or quarter), the larger your investment portfolio will become over time.
  • Thirdly, investing in India can grow your personal wealth by earning interest on those funds over time so that when those funds are withdrawn. 

Things To Keep In Mind While Building An Investing Portfolio

Portfolio building in India can be a daunting prospect. There are so many factors that need to be considered, and it's easy to get caught up in the minutiae of your investment strategy and forget about the big picture.

But it doesn't have to be that way. This guide will tell you how to build a portfolio that addresses your financial goals while still giving you room for growth.

  • Your Financial Goals

Financial goals can range from saving for a down payment on a house to funding retirement. The type of financial goal you have will determine how much risk you are willing to take on with your investments.

For example, If you're planning on retiring soon, then it makes sense to invest in low-risk investments like bonds or stocks. If you're more interested in saving for retirement rather than having money left over at the end of the month, then it might make more sense to invest in higher-risk assets such as stocks.

Your financial goals are the most important part of building a portfolio. You must be comfortable with the level of risk you are willing to take in order to reach your goals. If you are new to investing, consider only investing in companies that have a proven record of delivering returns, and which have been around for at least five years.

As you build your financial portfolios, consider adding individual stocks, mutual funds, exchange-traded funds (ETFs), or hedge funds.

  • Your Investment Horizon

Your investment horizon is the period of time over which you plan to invest. It can range from short-term, such as one year or two, to long-term, such as five years or 10 years.

How long do you plan on holding onto your assets? You may have a short-term goal in mind, like getting a house or retiring early, or a long-term goal, such as buying a vacation home or saving for college tuition.

Once you have determined how much money you want to invest, it's time to choose how long you plan on holding onto those assets. Depending on how long your goals are for holding onto those assets, this will impact what types of investments make sense for you to include in your portfolio. 

  • Your Risk Appetite

If you've got a high tolerance for risk (in other words, if you can stomach losing money), then it might make sense to invest more aggressively and take more risks with your investments.

On the other hand, if you're very risk-averse or prefer lower returns on your investments because they are safer (which is often the case with bonds), then it might be better for you if you stick with bonds or other less risky investments.

Your risk appetite is how much risk you're comfortable taking on with your investments. You might consider yourself a conservative investor if you look at your investments as stable assets that are meant to provide income for decades.

Or, you might be more willing to take risks with an aggressive portfolio that seeks out high returns but also carries a higher degree of risk. 

  • Holding Onto Some Emergency Fund For Yourself

You never know when something may happen to your car or house, and it would be prudent to have some money saved up in case of a disaster. You should be able to cover this expense as a precautionary measure and without putting your financial goals on hold.

Holding onto some emergency funds for yourself is a great way to prepare yourself for unexpected situations. You can use this amount to pay off debts, pay medical bills, and other expenses that may arise at the time of an emergency. This can help you avoid any unnecessary financial stress in the future.

The best way to build an emergency fund is through saving. If you do so, you will be able to save more in the long run without having to worry about being able to pay your bills at the end of each month. 

  • Do Proper Research And Return Analysis

Do proper research and return analysis before making any investments in your portfolio. This will help you determine which stocks are good for long-term growth, and which companies will be better off selling off their holdings in order to make room for new ones. 

It is important to do some proper research as it will help you determine whether or not the investments being considered are a good fit for your risk tolerance, your financial goals and needs, and any other factors that may affect your decision.

The most important thing is to consider the investment's potential return and risk profile. This will help you choose from among different investments according to their suitability for your own circumstances.

Conclusion

You have a lot of options when it comes to building an investing portfolio in India. The country has seen an uptick in interest from foreign investors, who can now access the country's stock exchange. This is an important step toward making your money work for you.

It's also important to consider what you're looking for in your investment portfolio in order to make sure that you're getting the most out of your investment. If you want to maximize returns while minimizing risk, then investing in stocks based on the sector you want to invest in will be a good option for you.

If not, then bonds might be a better bet for you as they tend to have lower risk and higher yields than stocks do. Be sure to choose investments that align with your goals and financial situation so that you can reach them over time with minimal effort and stress.

Disclaimer: The views expressed in this post are that of the author and not those of Groww.

Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. NBT do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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