Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
  • Retire
    • Income Investing Guide
    • Retirement Articles
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
Login My Member Benefits Archives Research Your Team About Us FAQ
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
    ×
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
    ×
  • Retire
    • Income Investing Guide
    • Retirement Articles
    ×
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    ×
  • Subscribe
Enter stock ticker or keyword
×
5 Ways to Beat the Fed (and Crush Inflation)
Twitter

How to Build a Stock Portfolio

Start the conversation

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.

Bonds

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

ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us COVID-19 Announcements How Money Morning Works FAQs Contact Us Search Article Archive Forgot Username/Password Archives Profit Academy Research Your Team Videos Text Messaging Terms of Use
FREE NEWSLETTERS
Total Wealth Research Power Profit Trades Profit Takeover This Is VWAP Penny Hawk Trading Today Midday Momentum Pump Up the Close
PREMIUM SERVICES
Money Map Press Home Money Map Report Fast Fortune Club Weekly Cash Clock Night Trader Microcurrency Trader Hyperdrive Portfolio Rocket Wealth Initiative Extreme Profit Hunters Profit Revolution Warlock's World Quantum Data Profits Live Trading Alliance Trade The Close Inside Money Trader Expiration Trader Flashpoint Trader Darknet Hyper Momentum Trader Alpha Accelerators Weekly Profit Cycles Brutus Alerts Resource Traders Alliance

© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell or Share My Personal Information