Summary of Creating a Portfolio
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Summary of Creating a Portfolio
Common sense tells us that investing all your capital into one investment is like "putting all your eggs into one basket." This could be very dangerous. Knowledgeable investors build their portfolios by combining different investments to work towards achieving their investment goals and reduce their investment risk.
The amount of capital that one allocates to an investment within a portfolio is determined by the risk and reward characteristics of that investment. Combining investments with different risk-reward characteristics tends to balance the overall risk of the portfolio. This process is called asset allocation. To get started on creating a portfolio, see the tools below.
Practical Ideas I Can Start with Today
- Determine the investment time horizon for each of my major life goals. Use this calculator to get a feel for how much I can save over various lengths of time.
- Determine my risk tolerance. Use this calculator.
What you have learned
- Allocating Assets for Short, Intermediate, and Long-Term Goals
- Allocating Resources for Investment
- Asset Allocation Based on Your Risk Tolerance
- Asset Allocation and Investment Risk
- Allocating Assets for Efficiency
- Diversification through Mutual Funds
