Do it right and investing can make you incredibly wealthy. Need proof? With a 10% annual return, a meager investment of $5 a day would turn you into a multi-millionaire over 50 years!

First, though, you have to build an investment portfolio that maximizes your chances of success. Unsure how to do it? Let us help.

Keep reading for some expert advice on investing your money the right way.

Consider Your Risk Tolerance

There are no two ways about it: investing your money entails risk. The real question is how much of it you’re willing to take on!

Make sure you pick investment opportunities that align with your individual tolerance for risk. If you’re risk-averse, for example, investing in something like bonds would be far preferable to volatile cryptocurrencies.

Be wary though. Where there’s risk there’s a reward! The more you accept, the more money you stand to gain, and vice versa.

Focus On Diversification

The real secret to a successful investment portfolio comes down to diversification. A buzzword of the industry, it simply means you should never have all your eggs in one basket! Instead of investing everything in one stock, you’d invest in many (and in different areas/industries as well).

A diverse portfolio helps to spread the risk. If one stock goes to zero, you won’t lose everything! For example, you might have 70% of your portfolio in a market index fund, 20% in real estate, and 10% in crypto.

Buy Low, Sell High

One of the hardest things to know for any investor is when to buy and when to sell. The most lucrative approach?

Buying stocks when the price is low and selling when it’s at a high.

Alas, timing the market like this is never easy. For a different (and less risky) method, try dollar-cost averaging. By investing small and equal amounts on a regular, periodic basis (regardless of the asset’s price), you’ll avoid the potential fallout of mistiming the market (e.g. buying just before the price plummets).

Take Action

Building your investment portfolio requires you to take action too! Don’t do what most aspiring investors do and wait forever to pull the trigger. The sooner you start, the longer you’ll have for compound interest to work its magic.

Oh, and contrary to popular opinion, you don’t need much money to begin. Search online for more info on this topic, but rest assured that anyone can do it, regardless of their initial budget.

Time to Build Your Investment Portfolio

It’s been said that poor people spend their money, the middle class saves it, and wealthy people invest. Are you trying to end up in the latter category? Well, knowing how to build your investment portfolio is a key piece of the puzzle.

With any luck, the personal finance insights in this article will help in this regard. Keep them in mind and you’ll be one step closer to generating significant wealth through investing. To learn more information on this topic and others like it, browse the “Favorites” section of the website now.