However, with so many options and financial advice that is given, it can be a bit confusing when it comes to starting one. Here is what you need to know when it comes to building a financial portfolio that will protect you.

Please note

The tips that are given should not be seen as financial advice, but as a general guideline. It does not take into account your personal financial circumstances; therefore, we encourage you to speak to a financial adviser to help create a financial plan that will work with your financial situation and goals.

What are your financial goals?

Building a financial portfolio without having any financial goals is a shot in the dark. It will create room where more losses and mistakes are made than finding a solution that will match your needs and current financial circumstance. Before starting out, think of what you would like to achieve financially. These could be short- and long-term goals. Your goals will act as a north star that keeps you going and focused, even when times are tough. Speaking to a financial advisor can make each goal manageable and help you avoid placing a strain on your current finances.

Start sharpening your financial knowledge

Understanding what you are investing in and how it benefits you can help you navigate managing your finances better. But what does this look like? Unless you are already working within the investment and financial management industry, you may want to consider brushing up on your financial literacy knowledge. Never be afraid to ask questions to get a clear understanding of what you are investing in and how it will benefit you. In the end, you want to aim to learn more about how you can grow your finances without working too hard to do so.

Start looking at your options

Are you planning on investing? There may be a range of investments that you have your eyes set on or are currently researching, but an important thing to keep in mind when it comes to investments is your tolerance of risk. Striking the right balance for you is understanding the level of risk you can afford, which is why it is crucial to consult with an investor or a portfolio manager that can make investments in your interest. 

The aim is to protect yourself at all costs

A financial portfolio is created to protect you and your ability to earn an income at all costs. It is also there to help you grow your finances without leaving you financially vulnerable. However, it is crucial to speak to someone who is qualified to help you establish and manage your portfolio to make the process easier for you. Start with the basics by protecting your stream of income that will keep you financially afloat even when the markets or your job performs in ways you were not anticipating. Make sure that you have your bases covered with things such as a legally recognised will, a life insurance policy, funeral cover and disability cover.

Avoid putting all your eggs in one basket 

When the time comes, you will need to diversify your financial portfolio to have the right mix to benefit you. Aim to build a portfolio that focuses on income and growth to give you a well-rounded portfolio. An income orientated portfolio will help you generate capital appreciation which will help you receive a regular and steady stream of income while a growth-orientated portfolio will assist in capital appreciation which will increase the value of your assets. 

Find the best growth portfolio

When it comes to finance management, boosting your financial education will be one of the most important things you can do, especially when it comes to saving and investing. With so many options such as stocks, bonds, unit trusts, trust funds, and exchange trade funds (ETF) it can get overwhelming when you start on your own. Having a professional investment portfolio manager or a financial advisor can ease the strain of finding something that works for your finances and will help boost it. Finding the best portfolio that works for your finances will be the best thing that you can do for yourself as you continue your journey to learn more.

Mind the interest

A common mistake is to always watch how the market in which you choose to invest in is doing. But the reality is, is that the market fluctuates, which can cause you to panic and sell something that could be beneficial if you just give it time. While it is important to keep your eyes and ears open to what is happening within the markets, it is equally as important to keep your eyes on how the business or company you choose to partner with is doing.

A business or company that continues to experience stable growth, even when the market is not doing so well, means that your investment is protected. Focus on the interest rate that comes with the investment product you are interested in. Is it high enough to see you receive a good return? Will it be able to keep up with inflation? Are the terms and conditions in line with the vision you hope to achieve with your funds?

Assess the return on your investment

All might appear well and good on paper but crunch the numbers to see if you will be getting a good return on your investment. For example, when taking out a life insurance policy check if it will be taxed, which can reduce the amount you or your loved ones receive. Check if the product has a competitive rate to offset inflation which means that it will maintain its value when the payout is paid.

Ongoing costs

Always check if you will be able to afford the ongoing costs. The initial fee may be low, but overtime these could be increased by percentages that can affect your premium. There could be age related premium increases or annual increases that can affect the overall amount that you pay. Check if you will be able to afford this overtime to avoid having it as a financial burden.

Constantly review your portfolios

Keep in mind that your life is constantly changing. Therefore, you will need a product that can keep up with such changes without coming with a hefty price tag. This is why it’s crucial to periodically assess if a financial product is still in line with your goals instead of pouring your money into something that no longer benefits you.