By making transactions in the stock market, you can receive income and incur financial losses. To minimize risks, we advise you to adhere to the following rules when compiling a portfolio:
They differ not only in essential characteristics but also in the level of risk and profitability. Generally, the higher the risk, the higher the potential return. For example, investments in shares of young companies are most at risk. Government bonds (OFZ) are considered the lowest risk.
Conformity of Assets to Investment Objectives
Before you start trading on the exchange, clearly state your financial goal. For example, if your main goal is to preserve and increase your investment with minimal risk, then a conservative strategy will suit you. It is most suitable for novice investors.
Portfolio diversification. You must distribute your capital between different assets. Even if one of them brings a loss, the growth of others will be able to compensate for these losses. Let’s take an example of how diversification works. Let’s say you bought shares in Aeroflot, Sberbank, and Gazprom. All these companies belong to different sectors of the economy. However, such a portfolio may not always be reliable. The fact is that these companies belong to the Russian economy and depend on it. In a crisis in our country, these securities may “sink” along with the expected income. Therefore, add securities of issuers from different countries and sectors of the economy to the portfolio. Also, please note that companies do not depend on one indicator (in our example, this indicator is the Russian economy).
Instrument liquidity. Liquidity is the ability to sell assets quickly and profitably on the stock market. We recommend that novice investors buy instruments with high liquidity.
What Principles Should Be Followed When Choosing Investment Instruments?
We’ve already covered the key points to look for when building a portfolio, but that’s not enough. To consciously choose investment instruments and achieve the necessary results, it is essential to know a few more rules:
Don’t spend all your money buying stocks. This approach can be hazardous for novice investors since the value of shares is highly dependent on economic changes and can change dramatically.
Shares discussed everywhere can be overvalued; they sell well above their value. Don’t trust everything they say. We advise you to study the company’s financial indicators independently: the dynamics of revenue and net profit, the number of funds in the company’s account, the presence of debts, and growth factors.
Don’t speculate. The speculation involves the receipt of income from changes in the value of an asset in the short term. For example, you bought a share for $10 and expected its price to rise to $12 in a couple of days. However, in practice, the security may “sink.” You must close the deal with a loss or wait indefinitely before it recovers and possibly grows. Speculation requires much effort, time, and expertise and is suitable for more experienced investors.
Read analysts and trusted sources of information; stay tuned. You can trust the opinions of experienced investors to find up-to-date ideas and a selection of promising securities on the broker’s website. So, based on forecasts and various reviews, you can decide on investing in a particular asset. However, it is essential to remember that only you are responsible for your decision, and no one can guarantee you a hundred percent future results.
What Can be Put into a Portfolio?
We advise you to build a portfolio for passive investments for novice investors. You will not need to make transactions daily, constantly follow the news, and study the financial statements of companies day and night. Passive investments are less susceptible to sudden changes in the economy and are suitable for investors who do not yet have bitter experience and professional Knowledge. Investing in precious metals can also protect you from unfavorable market conditions. However, their share in the portfolio should not be too large.
We remind you that no universal investment portfolio would suit every novice investor. The set of assets depends on your goals, capabilities, interests, attitude to risk, and investment duration.
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