Building Your Portfolio

Introduction

 

Like every investor, you want to choose investments that will provide the growth and income you need to meet your financial goals. To do that, it's important to understand yourself as an investor. That's because a portfolio that's right for someone else may not be best for you. The factors that make a difference are:

• Your age
• Your goals, or what you want to accomplish by investing
• The time frames for your various goals
• Your attitude toward risk—or what's called your risk tolerance.

You should also understand the ideas of asset allocation and diversification, which are discussed below. Only then should you consider what your investment choices are and how different types of investments put your money to work.