A successful investment portfolio develops from a deliberate
planning process tied to your specific goals, life circumstances and tolerance
for risk, rather than a series of unrelated investment decisions. A partnership
between you and your investment manager that merges your aspirations with sound
investing is the key to successful management. Over time, your circumstances
may change, so you and your portfolio manager should periodically reevaluate
your goals and objectives and their implications for your portfolio.
BUILDING
A PORTFOLIO
Define your investment
goals: Is your aim
to grow your assets, or are you more concerned with generating income? Are you
investing with a particular need in mind, like preserving assets for your
heirs, purchasing a business or financing an early retirement?
Recognize your risk
tolerance: What
level of risk are you comfortable with? Some investors are able to tolerate
wide swings in performance, while others are more interested in securities
whose prices remain relatively constant.
Determine asset
allocation: What mix
of stocks, bonds, cash and alternative investments is ideal? Your asset
allocation will be determined by your investment goals and tolerance for risk,
as well as by market conditions.
Select securities: To fulfill your investment
requirements and create a sound portfolio, successful security selection
involves research, risk analysis and a level of diversification appropriate to
portfolio objectives.
Investment goals, risk tolerance, asset allocation and
security selection will vary depending on the type of account being managed.
For example, a person’s taxable investment accounts will generally have
different characteristics than a retirement, education or trust account.
