As an investor, holding just one stock in your portfolio is never ideal. If the company goes bankrupt or has a catastrophic event, you could lose your entire stake.
Instead, it’s important to make a few wise investments to protect your portfolio and give it a chance to generate returns over time. According to a new survey, over 50% of Americans are now invested in the stock market.
If you are looking to invest your money and become part of the majority of Americans earning interest on their money, keep reading this guide and learn how you can build a diversified stock portfolio.
1. Start With What You Know
When it comes time for you to diversify your portfolio, you should start with what you know already.
You may know some of the most popular stocks without ever even looking at a financial app or news station. That’s because many of the companies all around us are public and available to invest in.
For example, if you have an iPhone and love the other Apple devices, you may want to consider investing in Apple’s stock. Or, if you do all your shopping on Amazon, you can consider that for your next investment.
Famed investor, Warren Buffet, is a long-time believer in buying companies that you can see yourself owning for at least ten years.
2. Select Different Types of Investments
Now that you invested in the stocks you already know, it’s time to branch out and start discovering other smart investments that can generate a financial gain.
This step is going to take some research. It’s essential to note that not all businesses are valued the same. Different industries can generate significantly different shareholder values.
You will want to diversify your investments and review your other options. A few popular investment categories include:
- Commodities (Gold, Silver, Platinum)
- Real Estate (REITs)
- Technology (Apple, Google, Facebook)
- Entertainment (Disney, Netflix, Comcast)
- Financial (Visa, PayPal, Mastercard)
- Banks (J.P Morgan, Bank of America)
- Healthcare (Johnson & Johnson, Pfizer, and Amgen)
- Energy (Chevron, ExxonMobile)
- Alternative energy (First Solar, Enphase, Sunrun)
As you can see, there are so many different types of investment to invest in to diversify your portfolio.
3. Evaluate Your Results
After making your first few investments, you will need to evaluate their performance and decide if they are still the right companies to have your money invested in.
If an investment is performing poorly, try to research and determine the cause. If something has changed, you will need to reevaluate your conviction on the asset.
Get the Most Out of Your Stock Portfolio
Diversifying your stock portfolio is one of the best ways to go about growing your wealth. Start by investing in companies you already know about and branch out and find other smart investment opportunities.
The most critical part of maintaining your portfolio is staying up to date with the latest information on your invested assets. To keep up with the latest happenings in the financial world, head over to our website!