Building a portfolio of stocks is a great way to give yourself a secure financial future. There’s obviously no certainty when investing in any market – but with the NASDAQ alone rising several thousand points over the course of a decade, it’s pretty clear that for someone who has time to wait and cash to tie up, the stock market can be a great choice. But actually finding the right stocks to choose can be difficult – especially given that there are so many different variables to think about. This article will explain how you can begin going about this process and what to look out for when making your planning decisions.
Individual – or tracker?
The first decision you’ll need to make is what sort of stock instrument you will need to go for. Some people choose to build a portfolio themselves by selecting different stocks and shares: this approach is handy if you’ve got the time and information resources to do your research. Alternatively, you can opt for a tracker: a product like this moves up (or down) in sync with the overall market. It’s often less effort, although it does require you to be confident that the market as a whole will move in your favor.
There’s never any guarantee in the world of stock investing, and this is something you’ll need to consider.
However, many brokers will be able to advise you on the sorts of stocks which are particularly risky, or you can work out potential volatility based on past performance using technical analysis. The amount of time you have to tie up your cash is also important here: if you’re leaving it in the stock market for 30 years, for example, you’ve potentially got less to worry about as there is more time for the market to grow and prices to increase.
Timing and context
If you’re going to approach your stock portfolio in a systematic and rigorous manner, there are several ways to carry out the analysis necessary to make the decisions. If you take the fundamental analysis approach, you’ll be making decisions based on the wider commercial and economic conditions in which a particular stock operates. Say you’re considering adding a tech firm’s stock to your portfolio: you might want to look at when that firm’s next big accounts release might be, for example, but you might also want to integrate consideration of the outcome of a tech regulator body’s next meeting. Having a stock events calendar on hand, especially one which covers global events and a variety of sectors, is a great idea.
With so many different aspects to think about, building a portfolio of stock options is a significant decision. From choosing between a portfolio of individual stocks and tracker funds to thinking carefully about the timing of the decision, there’s a lot to bear in mind. But with handy stock calendars, information sources and more on hand, you’ll be able to make informed decisions.