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Essential Tips for Beginners to Build A Strong Investment Portfolio

posted by Chris Valentine

If you are beginning out in life and have no clue about investments, please read this helpful article. Building a strong portfolio for the future doesn’t require much effort. However, as a rookie investor, you would still need some helpful advice in this direction. This article points out six ways by which you can make a sound investment portfolio.

Stocks

Stock trading activity is one of the most popular forms of building wealth over a period. Stocks also called as shares are the building blocks of a company. Every organization is built up by capital. If just one person provides this money, he is the sole owner of that company. Over a period, this owner might sell a part of his company to a few other people. When this transaction takes place, this company gets new owners, and this is how the company gets to be owned by more people.

Existing stockholders might want to sell off their shares to others. This how the company gets new owners.  You can either own a new company or buy shares of an existing one. Please contact a broker for getting the right advice before buying shares.

Trading in physical metals

You can complement your existing portfolio by investing in physical metals like gold, silver, platinum, copper and zinc. We have been buying gold for several thousands of years, for the reason that this metal stores a lot of value. Unlike stocks, the value of gold remains more or less constant. People buy gold for its cushioning effect during the recession. You can also sell the yellow gold to raise capital in times of extreme need.

Silver is also a much-preferred metal; people buy silver to augment their physical metal portfolio. The value of silver is less than gold, but unlike the latter, silver prices remain more stable over a long period. One can buy gold and silver from several online and offline dealers like Auctus.

Savings Bank Deposits

These deposits don’t qualify as investments per se, but you can use them to raise capital in times of extreme need. Opening a savings account is quite easy; all you have to do is go to the bank and do the necessary paperwork. Banks give you interest over your deposits, and this interest is accrued monthly, half-yearly or annually.

While the rate of interest is quite low, what works in favour of these deposits is the high liquidity. You can withdraw your money any time you want and with a minimum of fuss.

Fixed Deposits

Unlike savings deposits, the rate of interest in an FD instrument is quite high. This rate is tied to the duration of your deposit. For example, if our deposited 1000, AUD for 6 months, the rate of interest would be x%. This rate might go up or come down if the duration were changed. Once your term is over, you can withdraw your money plus the accrued interest. Please note that a fixed deposit is less liquid than a savings deposit.

Debt instruments

You may also lend money to companies wanting to raise funds for their expansion or other activities. This debt instrument is valid for a certain period, and your investment fetches a specific rate of interest. So, in a way, debt instruments look quite similar to fixed deposits. Before buying into a debt instrument of a company, check its credit rating.

Mutual funds

You can also invest in mutual funds to balance your portfolio. A mutual fund is a collective investment exercise where a group of investors pool their money into buying stocks or debts of selected companies.

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