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Steps to Build a Complete Financial Portfolio

Looking to become a successful investor? If yes, then you need to make efforts to maintain a good portfolio. As an investor, you need to understand your financial goals, your future requirements and risk-taking ability in order to determine your asset allocation. Building a good portfolio with the right mix of different asset classes will help you in generating wealth and living a peaceful life after retirement. This article will assist you in building a complete financial portfolio.


Let us learn about the steps for building a financial portfolio.


Steps For Building Financial Portfolio

  • Make A List

Before you begin making a financial investment portfolio, you must prepare a list of everything you own. The list must include all your assets like stocks, immovable property, cash and bank balance, bonds, etc. Also, prepare a list of liabilities. This balance sheet is going to play a critical role in shaping your financial portfolio. This list will act as a benchmark for your financial portfolio management.

  • Know Your Appropriate Asset Allocation

After knowing all your assets and liabilities, determine your financial goals and shape your financial portfolio. You must consider your age during financial portfolio management because only then you would know what would be your upcoming needs and how much capital you can invest.

Another factor that you must consider before determining your asset allocation is the amount of risk you can take. If you are clear with your future financial requirements you would be able to easily figure out your risk tolerance. It is a well-known fact that higher returns can be made only by taking higher risks. In such a scenario, the general rule is that if you are young, you can take bit of a risk. But if you are nearing your retirement, it is recommended to build a safe and secure financial portfolio.

To put it another way, there are two types of investors; conservative and aggressive investors. Conservative investors are those who would make a less risky portfolio by investing a major portion of capital in fixed income securities and small portion towards equities. Aggressive investors are just opposite of conservative investors. They are willing to take more risk in anticipation of good returns by investing a significant portion of capital in equities and remaining in fixed income securities.

  • Build the Portfolio

After determining the right asset allocation, build the financial portfolio. Here you can break different asset classes into subclasses. Like, if you are investing in equities, you can divide your investment in the equities into various sectors like pharma, banking, etc. The duration of the investment in bonds can be divided into short term and long term. Thus there are many ways through which you can select the asset and securities. While investing in each asset class consider the below-mentioned points:

1. Stock Picking: If you are investing in stocks, determine the level of risk you are willing to take. In addition, know the sector well before investing. Understand the market cap of a company, the future of a particular sector, the opportunities and risks in the future. You must make sure to regularly monitor the investment in equities by following the stock price, company and industry news.

2. Bond Picking: Before investing in bonds, consider the time period, maturity, credit rating, bond type and interest rate. Invest only after understanding the above factors in detail.

3. Mutual Funds: Mutual funds allow you to hold stocks and bonds that are managed by professional fund managers. Before investing in mutual funds, find the track record of the fund managers and fee charged by them. Low-cost index funds are another good option to invest for risk-averse investors as they replicate the performance of an index.

4. Exchange-Traded Funds: Exchange-Traded Funds are a good alternative to mutual funds. They are just like mutual funds and represent a group of stocks.  However, they are not actively managed like mutual funds. Because of passive management, these funds are less costly than the mutual funds and also offer good diversification.

  • Keep Assessing Portfolio Weightage

After preparing a financial investment portfolio, its value would keep on changing due to price fluctuations. Therefore, it becomes important to continuously rebalance the portfolio as per the price movement. Also, the market situation keeps on changing so you also need to alter the balance of your portfolio accordingly. While rebalancing the portfolio, analyse your future needs and risk appetite. Like, if you are ready to take more risk you can increase your stake in equities. Therefore, rebalancing is all about determining which asset class in your financial portfolio is overweight and underweight.

  • Strategy to Rebalance

After determining which securities to reduce or increase from your financial portfolio, you can again follow the process given above under “Build Your Portfolio” heading. By using the same investment approach, you can pick the securities you want to invest. If you feel that some securities in your portfolio which are overweight can fall, you can consider selling them and purchasing another set of securities. In the whole process, you must not forget the tax implication of your decisions.


The above mentioned steps shall help you in building a complete financial portfolio. During the whole process, you must always remember that diversification is the key to building a safe and secure portfolio. If you are a beginner or need any assistance in building a financial portfolio, you can contact IndiaNivesh Ltd. We are one of the most trusted and value-enhancing financial services group in India.




Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.