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Investing,Personal Finance,Shares,Tips & Tricks

How To Establish An Investment Portfolio

28 Feb , 2016  

Nikhil (Nik) Sreedhar
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Nikhil (Nik) Sreedhar

Founder at ProAdviser
Nikhil's dream job is to be an exotic car salesman. His favourite colour is orange and it shows as he is the 23 year old entrepreneur behind ProAdviser. You should follow him, he gets lonely.
Nikhil (Nik) Sreedhar
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If you are looking for a way to invest your money, why not consider building a share portfolio? The name itself may sound intimidating; however, there are plenty of tools to get you started into accelerating wealth creation. Depending on your investment goals and your knowledge of trading shares, your first step will be to pay a broker or financial trader to help you trade and manage, or instead to use an online platform to hold more control. There are pros and cons to each, and your choice will depend on your goals in investing and your knowledge with trading shares.

A full-service broker has the ability to trade and manage your portfolio, while also offering advice on investments you’re considering, yet they will charge you for their services. If you decide to commit to an online platform, it will definitely be cheaper than hiring a broker, yet you will not often be able to access advice with the online platform. Therefore in order to make informed decisions on trading, you will often have to do much of your own research. When you’ve decided on whether you’ll choose a broker or go with an online platform, consider also how functional a specific online platform is, and if it is easy to understand and navigate. Think about the accessibility with a specific platform as well; meaning whether or not you can access it on your tablet or smartphone.

Next comes the research, and searching out share quotes, along with looking at the range of exchange traded funds (which will include investment funds that invest in shares, commodities, and bonds). You will then need to decide what your first investment will be, perhaps choosing a small one if you’ve never traded before to minimize your losses. Starting of with a small buy will also be a great way to develop an investment strategy.

All of your shares and investments should correspond with your investment strategy which will include short-term and long-term goals. If you are with a broker, they can recommend shares, but if not, you will have to make the decisions based on your own research. People that are new to investing will often start with trading shares in well-known companies (for example, Apple is a tech company that is well-known and people perceive that it is often doing well financially), so they will encounter less risk. Others prefer trading shares in companies when they know the business and industry inside-out including its track record on delivering returns. This is especially beneficial if you happened to work in that industry beforehand, and you had first-hand experience of the market fluctuations of that particular industry.

Another type of share to consider is an income share, which regularly pays high dividend rates. Income shares are well-known, and have a reputation for this very thing. Similarly there are growth shares that do not necessarily pay a dividend, but are bought for their growth potential, as their share price will often grow faster than the rest of the market.

To increase your knowledge of different companies, read independent broker recommendations (try to find sources that are unbiased as possible) and market reports as well as what individual companies put out, such as their announcements and financial reports. This will inform you of their strategies, and how different companies perform on a seasonal basis. Once you eventually take the plunge of buying a share, your research will help you understand the mechanics of the company, and when the optimal time to sell is. Any research you conduct should be for the purpose of having a greater understanding of the company and how their decisions influence the market. Or if you have a broker or financial advisor, seek advice from them as well.

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