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Portfolio Design: Overview

One of the most important aspects of investing is the actual design of your investment portfolio. Your individual investment decisions should be coordinated and organized according to a well-defined portfolio design. Just like investment professionals, you need to develop a customized portfolio design to guide and coordinate your individual investment decisions. The key items you need to focus on in this process include

  • your financial goals
  • your ability to save
  • your required average annual rate of return, and assuming the least amount of investment risk as possible

 

 

In this section of the website, we outline a 12-step process that you can use to design an investment portfolio that is based upon your individual financial circumstances. The resulting portfolio design will help to ensure that all of your individual investment decisions are complimentary and supportive of your financial goals. Creating your portfolio design is the easy part, actually having the experience, confidence, and discipline to implement and maintain your design is the hard part.

Note: InvestingForMe provides sample portfolios that provide concrete examples of how a portfolio is created, implemented, monitored, managed and measured. Visit our Sample Portfolio section for further guidance.

For most Canadians their current investment portfolio is a collage of individual and separate investment decisions. One investment decision is often made in isolation of previous decisions. More often than not our investment decisions are made at the time of our savings contribution and are based upon what seems to be working at that moment. This adhoc approach to investing can be counter-productive with previous investment decisions and can actually work against achieving your financial goals. For example, unfortunately many Canadians probably wouldn’t know the answers to the following pertinent investing questions: 

  • How do you know if all of your investments are working together or against each other?
  • How do you know if you are over exposed or under exposed to certain investment categories?
  • How do you know if your portfolio is too risky or too conservative?
  • Is your portfolio making or losing money? How do you know?

In our Portfolio Design section we will help you answer these questions.

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