Choosing your investment portfolio type

When it comes to having an investment portfolio, for some people this just happens automatically. They start off buying shares in a company, quite often the company that they work for, and then over time they might buy into other companies too: those that they have carefully researched hopefully, but many people actually buy in gut feeling or something of a whim rather than studying the financials first, which is not recommended but simply a statement of what many people do!

For those who prefer a more ordered approach, before even deciding what to invest in they will work out how to invest: the format of their portfolio, as it were.

There are various different types of portfolio that can be constructed, depending on what someone wants to achieve. For instance the person who wants a lot of short term growth and is willing to risk a lot will have a very different looking portfolio to someone who does not want too much risk and just wants their money to grow on the long term basis, and will not be checking it daily and probably even weekly.

One thing is sure about any portfolio: it will move, with assets rising and falling on a daily basis. If one share goes up 5% in a day, you may well have another that goes down 5% and if you have equal amounts of each then these can balance out. Typically however with a share portfolio when market sentiment is good on average a share price will go up but when it is bad they will all go down, so you might see those trends of a good day or a bad day on the markets reflected in your portfolio.

Depending on the way your portfolio is constructed, you can aim to take advantage of various different scenarios, with elements that can benefit from various financial phenomena such as deflation or inflation and so forth

There are lots of different ways of constructing a portfolio, but it will ultimately come down to risk appetite, the moneys you have to invest, and whether you are looking for short term or long term gain.

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Choosing your investment portfolio type

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