If you want to make a robust portfolio, here are some tips:
- Do your research. Before you buy any stock, it's important to do your research and understand the company. This includes looking at their financial statements & having deep insight about the important aspects of the company required for growth & success. It has been already simplified in previous articles about stock picking.
- Consider your risk tolerance. Invest in a diversified portfolio of stocks.
- Set a price target. Before you buy a stock, decide how much you're willing to pay for it. This will help you avoid buying at the wrong price. You don't need to buy expensive stock but similar stock with fair value having competitive edge.
- Invest for the long term. You need to be patient. The stock market will go up and down in the short term, but over the long term, it's likely to go up.
- Don't panic sell. When the market goes down, it's tempting to sell your stocks. But if you panic sell, you'll lock in your losses. Instead, stay calm and ride out the storm.
Your portfolio should consist of 5 -10 or 10 - 20 stocks. You can increase the number of stocks but then profit proportion will vary. Invest in as many numbers of quality stocks as one can monitor & focus conveniently. Here are some additional tips for investing in each stock in your portfolio:
- Start small. You don't need to invest a lot of money to get started. Even investment of small amount can make a difference over time.
- Consider investing in a growth stock. A growth stock is a company that is expected to grow its earnings at a faster rate than the overall market. This type of stock is a good option for investors who are looking for long-term growth.
- Look for companies with strong fundamentals. When you're researching a company, look for things like strong financials, a good management team, and a competitive advantage.
- Consider investing in a dividend-paying stock. A dividend-paying stock is a company that pays its shareholders a portion of its profits. This can be a good way to generate income from your investment.
It's important to remember that there is no guarantee that any stock will go up in value over time. However, if you do your research and invest in a company with strong fundamentals, you'll increase your chances of success.
