Building Your Investment Portfolio – Tips for Your Financial Goals

Building Your Investment Portfolio

Building your investment portfolio takes careful consideration and a well-thought-out plan.

Your financial situation, goals, and risk tolerance should determine the allocation of your investments among different asset classes. This will help to mitigate risk and maximize returns.

For example, your risk tolerance may change over time based on your age and how much time you have before a significant financial event, such as retirement. It may also depend on your psychological reaction to market volatility.

Financial Goals

One sure way to avoid reaching your financial goals is to wing it. Instead, create a plan, either on your own or with the help of a professional like David Adelman, that includes specific and measurable financial goals. Those goals should be tied to your motivations, as this will make them more meaningful.

Start by creating a list of your financial goals, from necessities like an emergency fund to a splurge like your dream vacation. Then, break them down by their estimated costs and how long you expect it will take to save for each.

Suppose you’re working toward a short-term goal, like paying off credit card debt and set intermediary milestones to keep you on track, such as cutting down your debt balance by a certain percentage monthly. For a medium-term goal, such as saving for a down payment on a home, you can use automated savings strategies that put your paycheck into savings each period.

Asset Allocation

Determining the best asset allocation for your needs takes a lot of thought and consideration. It involves finding the right mix of investments to help achieve your financial goals and meet your risk tolerance. Asset classes typically include stocks, bonds, and cash or cash-like assets.

Historically, investment returns from these different asset categories have stayed the same, so including complementary asset-class investments in your portfolio can reduce the likelihood of substantial losses.

For example, if you’re in your 20s, allocate a higher percentage of your portfolio to stocks because you have many years to recover from market losses and reap the benefits of compounding. But as you approach retirement, it may make sense to shift to a lower-risk portfolio so that your savings can last throughout your life.

Asset allocation is an ongoing process, and investors must periodically rebalance their portfolios to bring them back into alignment with their goals, risk tolerance, and investment horizon.


Diversification is spreading your investments across various forms, industries, and locations. This helps reduce the risk that a particular investment will suffer from a sudden decline.

A portfolio might include funds focusing on small and large companies, those focusing on aggressive growth, and those international. It also might consist of bonds from various issuers (the federal government, local and state governments, and corporations) with varying terms and credit ratings.

In addition to these traditional asset classes, consider alternative investments such as collectibles (like rare wines or baseball cards) and real estate investment trusts (REITs). These investments often have low correlations with traditional assets and can add valuable diversification benefits to your portfolio.

Work with a qualified investment pro to find the best alternatives for your portfolio. They can also help you develop a plan to regularly review and rebalance your portfolio to maintain proper exposure to each type of investment.


Suppose your goal is achieving a secure retirement income. In that case, move from the safety of cash investments like CDs or money market accounts to growth-oriented investments such as stocks (equities) or mutual funds holding these securities.

Your risk tolerance and investment time horizon will also affect your portfolio construction. For example, you have many years before retirement. In that case, you can afford to invest more of your portfolio in riskier assets, such as stocks, because you’ll have ample time to recover from temporary market losses.

A financial advisor can help you develop a retirement plan with an age-appropriate, well-diversified investment portfolio reflecting your risk tolerance and financial goals. Your advisor can also suggest rebalancing strategies to keep your portfolio on track toward reaching its goals. This involves periodically selling some winners and buying some losers to maintain an asset allocation that aligns with your goals.