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12-Step Process to Portfolio Design

Because the investing world offers so many investment options and is constantly creating new investment products, investors face a daunting task in the selection of investments that are best suited for their investing personality and financial goals. If you only had two or three investment options to choose from, your investment decisions would be so simple. Unfortunately, the investing world has created thousands and thousands of investment products over the past four decades, and this has caused more confusion and distress for investors than it has resolved.

 

 As a result of the thousands of options facing individual investors, experienced investors have come up with a methodology (or how-to list) to help them select and manage their investments. It usually takes the form of some kind of 12-step process in order to bring structure, consistency, and focus to their investment portfolios. Without such a defined investment structure, most would soon become overwhelmed by the world of investing.

 So whether you are an experienced or a novice investor, you and your investment portfolio would benefit greatly from formalizing your portfolio design and management in writing by using the 12-step portfolio design process we have created below. By committing your portfolio design in writing in these 12 steps you will be able to stay focused during good and difficult investing cycles.

Note: While this outline will get you started in investing, to see IFM's proven successful 12-step approach, visit the IFM Approach section for a more detailed discussion on portfolio design.

 The following illustration outlines the 12-step process:

Note: To get started on designing your own individual investment portfolio, see Step 1: Identify Your Financial Starting Point.

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