How to build a smart investment portfolio

Right options and timing is everything when starting an investment portfolio. With numerous options that have taken over the market today, ‘smart’ investments are often the most sought after.

Investing in equity markets can be quite risky and at the same time garner high returns. While investing in debt funds can assure only modest gains.

Similarly there are other investment options such as investing in gold, real estate, commodities which are different asset classes. At some point or the other every investor faces the dilemma of how much should be invested in what asset class.

So to end the year of 2017 here are a few tips on creating a smart investment portfolio.

Setting financial goals

Many young people rarely, or never, invest for their retirement years. Unless you know what you need the money for, setting aside money for investments can become pointless.

When setting financial goals, investors should take into account short term and long-term goals. Short-term goals could be achieved in a span of two years, whereas long term goals may stretch beyond five years.

Goals can be defined by different individuals as – buying a house, getting married, children’s education and retirement funds.

Funds allocation as per risk appetite

After setting of goals becomes clear, it is important to assess the risk an individual can undertake.

Multi-cap mutual funds can garner up to 12% returns over a long period of time. However investing in mutual funds may not necessarily exempt you from paying taxes. ‘Wherever you go, the taxman may follow.’

Yet, the need for an ‘optimal’ portfolio is the need of the hour.

“Five or six good, manager’s funds very different from each other should be bought. The performances of these funds will be good backed by handsome returns and risk being moderated,” Feroze Azeez, Anand Rathi, online stock trading and advisory told Zeebiz.

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