How to Build a Stock Portfolio

As you get started on your investment journey, you’re going to want to know how to build a stock portfolio and a profitable one at that. Which stocks do you choose? Are there different types of stock? How much risk should you take? We’re here to answer all these questions and more in the Money Morning Profit Academy.

In this module, you will learn what it means to build a stock portfolio. Let’s get started.

Building a Stock Portfolio: Know Your Options

In the simplest sense, stocks are an investment in a company.

Think of it as buying a tiny share of a company, such as Apple (NASDAQ: AAPL), and tracking that company’s profits. Of course, stocks are just one investment vehicle. There are other options, but we believe that investing in the stock market is the best way to set yourself up for significant gains when you have an investment strategy in place.

In addition to individual stocks, you also have other investment vehicles. Here are some of the most common:

Mutual Funds

Mutual funds are collections of stocks that represent many different companies in a single transaction. There are many different types of mutual funds, including fixed-income funds, index funds, money market funds, and more (we explain all of these in more detail throughout the course). Compared to individual stocks, mutual funds are generally more diverse, but also generate more modest returns.


You can think of bonds as a type of IOU from an organization, usually a large governmental business (think: the United States Treasury). They represent a piece of a loan from these organizations. Although bonds are generally extremely conservative, you can’t expect much of a return from them (you might not even outpace inflation).

Retirement Accounts

You likely already know about some of the most common retirement accounts. A 401(k) is a retirement investment account offered by an employer. An IRA, or Individual Retirement Account, is a retirement account that isn’t associated with a particular company. These investment vehicles are great for focusing on one goal (saving for retirement), but they don’t offer you much flexibility. You’re usually put into a portfolio, such as a target-date fund, and you just set it and forget it.

Although these investment vehicles have a time and place, we show you how to build a stock portfolio because we believe stocks are the most efficient way to grow your wealth when you know a few simple rules. Let’s look at the steps to get you started building your portfolio before we dive into the more advanced lessons in this course.

How to Build Your First Stock Portfolio

Learning how to build a diversified stock portfolio is one of the most exciting parts of investing because you get the chance to customize your portfolio based on your needs.

Here are a few tips and tricks to help you learn how to build a stock portfolio:

1. Decide How Much Help You Need

In the past, investors had to work with a traditional stockbroker to have them execute their trades. Today, with the rise in robo-advisors, you can have a self-managed account without the need for a stockbroker.

We talk more about stockbrokers in the next lesson, but your three main options when creating your stock market portfolio are:

  1. Working with a stockbroker (like an advisor at an organization like TDAmeritrade or Merrill Lynch)
  2. Working with a financial advisor
  3. Using an online platform like Robinhood

Working with a robo-advisor will save you money on fees and management but working with an in-person advisor will give you hands-on guidance.

2. Identify Your Goals and Timeline, and Risk Tolerance

The next thing you’ll do when building your stock portfolio is identify your goals and their timelines. How you invest will depend on these factors because you’ll have a different strategy for your short- vs long-term goals.

For example, if you’re saving to buy a house in the next few years, you may consider more conservative investments to give your capital a little boost. This is because you’ll need the money sooner and if things go down, you might not have as much time to recuperate your losses. On the other hand, if you’re saving for retirement, you may have more flexibility to take some risks because you’ll have longer for the market to bounce back.

You will also consider how liquid you want your assets to be. On apps like Robinhood, you can access your funds in a matter of days. In other scenarios, it may take longer to have access to those funds.

3. Know Your Risk Tolerance

Next, you should identify your risk tolerance. Risk tolerance refers to how comfortable you feel taking risks with your money. Some investors might be able to stomach investing in small startups that fluctuate up and down, while some investors might stick to a more conservative route and just shoot for modest gains. Knowing your risk tolerance will help you choose the right stocks for your portfolio.

4. Know Your Asset Allocation

Like risk tolerance, how you decide to allocate your assets will depend on your own goals. Later in this course, we talk about our recommended investing models and how they can help balance your portfolio. In short, you will have some stable stocks to build a strong foundation, some growth stocks, and some risky stocks to hopefully drive larger margins.

4. Choose a Diversification Strategy

Any investor has heard the word “diversify” more times than they can count. Diversification refers to making sure you have many different types of investments to protect yourself against market downturns. Later in this course, we will talk more about what diversification looks like and how to build a stock portfolio that is both diverse and profitable.

5. Research Good Stocks to Buy

One of the reasons why people love to invest is because there’s always something new to research and learn. As you build your stock market portfolio, you will spend time researching the best stocks to buy. Later in this course, we share our opinion on the best stocks to buy and why.

The Path to a Profitable Stock Portfolio

More goes into achieving your financial goals than buying and selling stocks. You need an investment strategy, too. And having an investment strategy and managing your own portfolio can save you hundreds of thousands of dollars. This investment class will show you a simple strategy to build a strong, diversified portfolio and how to find the best stocks to buy. Start learning by clicking the lesson below.

Lesson Breakdown:

Lesson 1: Why Your Broker Isn’t Your Friend

Lesson 2: The Real Story Behind Diversification

Lesson 3: The 50-40-10 Method

Lesson 4: How to Find Good Stocks

End of Module Quiz