Building of Investment Portfolio and Property Investment Tips

Precious metals and commodities should also figure on the investment portfolio. On combining time horizon and risk tolerance, the investor can make adjustments in the proportion of the investments in stable and volatile securities.

New York City, NY (prHWY.com) January 28, 2013 - Building investment portfolio requires a bit of guidance, time, idea of asset allocation and experience. For the same it is necessary to give first priority to paying off one'scredit card debts. Next, it is required that one builds up an emergency fund for one's family. The total value of the same could be a minimum of his living expenses of three to four months. He should invest the same in a savings account which earns him interest at the prevailing rate and which can be readily available to him in times of emergency.

Next, he should build up a retirement portfolio. If the need arises, he could take the help of a financial expert who can help him with the planning of the same. He should now select a suitable asset allocation which will account for about ninety percent of the return on his total portfolio. The remaining can be devoted to individual securities.

Stocks and bonds are the most basic classes of assets. There are many different types of stocks like small cap stocks, large cap stocks, preferred shares, real estate investment trusts, domestic stocks, foreign stocks, etc. Short term domestic bonds, long term domestic bonds, foreign bonds, corporate bonds, real return bonds, etc. are the types of bonds that one can invest in.

Precious metals and commodities should also figure on the investment portfolio. Generally experts recommend putting about 10% of one's total assets into investments related to gold and other precious metals.

It is important to consider the time period in which to invest after which the funds will be required. On the basis of this factor (which is also referred to as time horizon) the asset allocation can be done. Hence the investment portfolio of each person varies as per the necessity of funds; when the investments are made; the different assets in which they are allocated and the age of the investor. The general advice to investors is that the percentage of investments in cash and bonds should be approximately equal to the age of the investor.

Another important factor to be considered during asset allocation is that of risk tolerance. The investor should have a good idea of his risk tolerance and accordingly he should plan how much to invest in safe securities like cash and short -term bonds. Here, the returns will be low, but stable and the risk too is quite low. Likewise he must decide how aggressively he can put in volatile securities like stocks and thus must be ready to accept the fact that he could stand to lose all his invested money here as the risk factor associated with maintaining this type of portfolio is quite high as compared to the former. At the same time, there are expectations of high potential returns, especially if the company whose stocks one is investing in is well established. So the overall portfolio which will be a combination of the above two must be such that the investor can take investment failures in his stride.

On combining time horizon and risk tolerance, the investor can make adjustments in the proportion of the investments in stable and volatile securities, based on his comfort zone. A thumb rule is that he can increase the percentage of his stable investments by 25% if he is not very risk tolerant, otherwise he can decrease it by the same proportion if he is extremely risk tolerant.

Property Investment Tips

Once the investor is sure that he wishes to buy a property in order to rent it, it is essential for him to do exhaustive research of the market. If need be, he could take the help of people experienced enough in this field like reliable property realtors.

Choosing areas preferred by people for a number of reasons like the ease of accessibility to essential centers of shopping, malls, health centers, etc. is important. Good transportation facilities, educational institutions must be close to the vicinity.

Comparing the rents in the surrounding areas with the property under consideration will also help. Also enquiring about the refundable deposit amount will give an idea about how to proceed with the deal.

In all possibility, the property may not be rented for a few months and the investor is advised to be prepared for the same. In addition, annual maintenance and repairs of the property have to be considered.

Due consideration of the needs of different tenants will give apt returns on the property. Accordingly, simple, clean arrangements for students, modern ones for professionals, homely decors for families, etc. will do the trick.

Buying with mortgages will not yield the investor with a rent-to-property-price. There should be due consideration of taxes, costs for maintenance and other such expenses. Rent will build up over time and then it has the potential to be used as a deposit for other investments and for paying off the mortgage after the term ends.

For more information, visit more: http://www.1realestateinvesting.com/real-estate-news/

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Tag Words: building investment, property investment tips

Categories: Real Estate

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