Top Building Blocks For Your Investment Portfolio – Introduction

Having a well-balanced portfolio is an important thing that any trader should always focus on. As I have mentioned before, trader should have two distinct accounts. The first one should be focused on day trading and the second one should for making long-term investments. For the latter investments, I have written about doing it yourself without having to pay someone or a company management and incentive fee. In this article, I will look at the main components of a good investment portfolio.

  • Stocks

Stocks are important fundamentals of a good investment portfolio. Stocks are the shares of companies that are listed in a stock exchange. For example, you can buy stocks of companies like Google, Facebook, and Apple and wait for the shares to appreciate. For a long-term investment, you need to focus on companies that have a good product that will probably last for a long time. You should buy companies that you believe are under or fairly-valued. Also, before you buy any stock, you should ensure that you have done adequate research about the company and its management. For trading, all this should not count as you only want to make quick cash.

  • Bonds

Local, regional, and national governments need money to run their operations. The same applies to companies and learning institutions. They also need money to fund their long-term investments. To do this, they turn to investors who give them funds. These funds are known as bonds. A bond has a fixed interest rate which is paid in certain intervals of time while the principle amount is paid at the end of the maturity period. Investors who buy the bonds when they are issued can hold them until maturity or sell them before they mature. It is important for you to have bonds in your portfolio as this helps you in diversity.

  • Real Estate

Real Estate has always been an interesting holding to have. Over time, the value of real estate has gone up and down but the fundamentals remain the same; that land is a finite resource. As an investor, it is important to have a portion of your portfolio dedicated on real estate. You should focus on residential properties that are immune from up and down moves in the economy.

  • Blockchain

We are in an age where blockchain is an important part of the society. Blockchain technology has seen immense growth in the past few years. Today, the value of bitcoin has gone up to more than $2000 and that of Ethereum has gone up by more than 4000% in the past two years. Your portfolio should have a very tiny portion on both bitcoins and ethereums. For these two, you should buy just a few of them in your portfolio.

  • Commodities

You should also have a few commodities in your portfolio. This is where you buy a commodity and wait for its value to appreciate. You can buy gold, coffee, silver, and crude oil. When you buy these commodities, you should ensure that you have done enough research about the demand, supply, and the general trends. You should also ensure that you carefully monitor these prices and liquidate when you believe there will be a reversal.

  • Cash

A substantial part of your portfolio should be on cash. In a period of volatility, cash is the only sure thing that you can have. This is because cash will always have its value. Cash will always help you buy the above items when an opportunity emerges. When you look at most successful investors, you will find that they have these items in their portfolio.

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