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How to Create an Investment Portfolio in Your Early 20s

IndianMoney.com Research Team | Posted On Tuesday, March 24,2009, 07:37 PM

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How to Create an Investment Portfolio in Your Early 20s

 

 

Step1


Set goals. If your objective is retirement, calculate how much you will need vs. how much income you will have when you retire.

Step2


Choose a strategy that will allow you to meet your goals. Brokers and others offer varying advice on the best way to allocate assets, therefore talk to financial advisors, read financial newspapers and magazines, and visit financial Web sites.

Step3


Pay yourself first. Set aside 10 percent of your annual income and invest it.

Step4


Invest in an Individual Retirement Account if you are eligible.

Step5


Put your money in conservative investments at first; for instance, mutual funds that buy a variety of blue-chip stocks. After you have a solid foundation, you can choose higher-risk investments.

Step6


Diversify. Buy a variety of investments; for instance, if you are investing in mutual funds, you might put 30 percent of your money in growth funds, 30 percent in aggressive growth funds, 20 percent in tax-exempt bond funds and 10 percent in money-market, checking and savings accounts.

Step7


Buy what you know. If you go beyond mutual funds and decide to buy individual stocks, invest in companies that you know something about.

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