How to build a diversified investment portfolio: step by step

A diversified investment portfolio can help protect your funds against market swings and increase your earning potential. But choosing how to build a good portfolio is an important step. Diversification is essential to achieving consistent returns.

This practice aims to spread the risk, meaning you don't put all your eggs in one basket. A diversified investment portfolio serves a specific purpose, which is security. If you invest in a variety of assets such as stocks, bonds, mutual funds, options, commodities and other assets, the potential for losses in a given asset segment will be lower due to the spread of risk.

It is important to keep in mind that no investment plan can guarantee a profit or fully protect your investments. You should also assess your risk tolerance before starting an investment.

What to consider about your investment portfolio

It is crucial to consider your individual investment objectives and then determine which assets, securities and investment strategies will be appropriate to achieve those objectives. It may be helpful to enlist the help of a financial advisor to help you develop a portfolio that offers adequate diversification.

Next, we will cover the main steps for building a diversified investment portfolio. First, define your objectives when investing in the market, such as making money, investing safely and obtaining high returns. With your objectives well defined, you can start carrying out research on different types of investments.

It is important to educate yourself about the benefits and risks of each investment, providing you with a more informed decision about the types of investments that are bold, but associated with risks that can be managed. Then you can start to allocate your resources within the portfolio, starting with increasing short-term projects.

How to build a diversified investment portfolio

It's important to understand that building a diversified investment portfolio takes time, careful consideration, and considerable effort to find the investments that are worth your money. However, it is still possible and, therefore, we have prepared this step-by-step guide to help you create your own diversified portfolio.

1. Start: Spend time evaluating your investment goals. Determine how much capital you want to commit to the investment, your return on investment (ROI) goals, and your limits. For example: what income do you expect to obtain, what is your maximum risk, how long do you want to keep your investments and what tax rates apply to certain financial instruments?

2. Take inventory: Make a list of your existing financial assets. This should include information such as current value, business fortunes, stocks, bonds, loans, bank deposits, real estate, properties, exported securities and other investments of a more speculative nature.

3. Examine your investments closely: Evaluate the characteristics of all your investments individually. For example, are you investing in stocks or bonds? Is it a stable or volatile company? What do the tax rates that apply to your investments mean?

4. Understand the concept of diversification: The concept is simple: it is important to diversify to reduce the risk associated with the investment. Diversification covers different types of assets and also different geographies. With diversification, all your assets do not move at the same time and with the same intensity.

5. Examine additional aspects of the investment: Examine and evaluate other aspects of investments. Consider the order of your investments – for example, find out which type of investment is more profitable or which has less risk.

6. Make your portfolio selection: Select investments that can be diversified according to your investment objectives and limits. Examine investments like stocks, bonds, mutual funds, real estate, precious metals, etc. to diversify your portfolio.

7. Allocate your resources: After selecting the investments you want to include in your investment portfolio, you can begin to allocate and distribute your resources according to the risks and returns that each one will have. Don't forget that each investment has a different period, so it will be important to allocate your resources so that they are aligned with your time horizon.

8. Regularly review your portfolio: Finally, evaluate the timing of the investment, the income before withholding, the costs associated with investments over time and the amounts of taxes applied. Review these elements periodically to ensure your investments remain profitable and diversified.

Final considerations

Making an investment portfolio can be a great way to diversify your asset portfolio, manage risks and, eventually, increase your purchasing power.

However, to obtain positive results, it is important to remember that it takes time and dedication to monitor the chosen assets and make new selections, in addition to consistent research and analysis.

It should be Also be careful with the fees charged, as they can eat away at your earnings. It is important to be careful when investing and not buy assets if there is no certainty and certainty that the results will tend to be positive. With this, it is possible to obtain gains with the chosen investment portfolio.