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How to build your investment portfolio from scratch

building portfolio from scratch

How to build your investment portfolio from scratch

Building an investment portfolio from scratch

For most people, building an investment portfolio is a tough task. This is because while they can pull off superhuman feats in their 9-6 job every day, they lack the knowledge and confidence that is required to construct an all-weather portfolio. They do not know much about stocks. They own gold in the form of jewellery and real estate in the form of a residential property.  Even if a person does not know much about complicated financial terms, building a good investment portfolio is possible – it is actually quite simple! Investment requires that you have a clear knowledge of your financial goals, your appetite to take risk and your investment horizon. Every single product in your portfolio has an objective. Once you know what you want, just add those to your wealth kitty. Continue reading to know more.

Growth factor

All investment portfolios need growth. This growth, when occurring consistently over a long term, builds wealth for you. Equities are among the few asset classes that have the potential to give you good returns. But, direct equity investing requires skill, knowledge and patience and also comes with downside risks if you cannot monitor it regularly. You will need to know which stock to buy, when to buy, how long to hold, when to sell and keep track of news and market movements regularly. If doing all of this seems difficult, there is a simpler option. Choose mutual funds to do the job for you. In a mutual fund, it is the fund manager who decides where and when to invest. This means that you leave the choice of investing and managing downside risks to professionals.  When you are ready to start investing, you may approach Standard Chartered to start an investment relationship. We will help you understand your risk profile and you can also view fund ideas in line with your risk appetite. In the alternative, if you are clear on the fund you want to purchase and understand the risk and returns, you can complete your purchase online, at your convenience, using our Online Mutual Funds platform.  If you want to start off small and maintain a disciplined investing approach, use the Systematic Investment Plan (SIP) route for mutual funds. SIPs also help you ride out market swings – since you invest a fixed amount every month, you get more fund units when the markets are priced low and less units when they are high. This is the principle of ‘rupee cost averaging’ – this ensures that over a long period the effect of market swings on your unit cost of purchase is averaged out. As a thumb rule, if you are below 35, it is good to allocate a large portion of your wealth to equities to gain from the possibility of long-term capital appreciation. Mutual funds invest across various asset classes comprising both equity and debt. Hence, if you have goals that require wealth creation over a long term and are comfortable with the accompanying risk, choose equity mutual funds and invest in them online.

Fixed income stability

In every cricket team there are some swashbuckling batsmen and some who can hold the innings together. Likewise, every investment portfolio needs to have the stability provided by fixed income. As is clear from the name, fixed income or debt investments generate a stable source of income. You need to use fixed income stability to hold your portfolio together at times when equity markets are volatile. Choose from a range of bank fixed deposits, debt mutual funds, and recurring deposits. FDs give you guaranteed principal protection and returns in the form of interest, but are subject to default if the bank issuing them collapses. Debt mutual funds can give higher returns and better tax adjusted gains, but also have an accompanying risk if the issuer of the debt securities fails to pay returns on time . Recurring deposits are like SIPs in bank deposits.

Protect and play

At the core of all investment portfolios is capital. This capital or money is your hard-earned savings. You build a portfolio with this money by allocating it between growth assets and fixed income assets. But, what if you die tomorrow? What happens to the financial needs of your dependents like spouse, children and old parents? To get complete protection, you require an insurance cover. Insurance solutions, like term coverhealth insurance plans and personal accident plans, protect you from possible risks. With insurance, your financial goals are protected. If something unfortunate happens, the goals can stay intact and be met. Standard Chartered brings you a range of insurance offerings from their insurance partners. Check out the range offerings here.

Markets may go and up down, but your wealth needs will remain. Use our tools and calculators to estimate your needs. Then, start the work of building the portfolio.

Your investment portfolio should contain different types of asset classes. This will give it a diversified flavour, resulting in a lower risk. Since we do not know which investment will do well in a particular period of time, it would be smart to allocate a certain sum of money to all of them. In this way, you will maximize your chances of building and growing wealth. Do not keep all eggs in one basket. Think long-term and build a solid investment portfolio!

To know more, speak to us today.

Disclaimer

This document is for information and educational purposes only. It is meant only for use as a reference tool. It has not been prepared for any particular person or class of persons. The products and services may not be suitable for everyone and should not be used as a basis for making investment decisions. This document does not constitute investment advice nor is it an offer, solicitation or invitation to transact in any investment or insurance product. The value of investments and the income from them can go down as well as up, and you may not recover the amount of your original investment. Prior to transacting, you should obtain independent financial advice. In the event that you choose not to seek independent professional advice, you should consider whether the product is suitable for you. You should refer to the relevant offering documents for detailed information. Standard Chartered Bank does not provide any investment advisory services under the wealth proposition. Standard Chartered Bank in its capacity of a distributor of mutual funds or while referring any other third party financial products may offer advice which is incidental to its activity of distribution/referral..

Mutual Fund Investments are subject to market risk. Read scheme related documents carefully prior to investing. Past performance is not indicative of future returns.

The Online Mutual Funds platform is an EXECUTION-ONLY platform. If you wish to receive advice from us in relation to transacting in Mutual Funds, you should not use the Online Mutual Funds Platform but should instead contact your banker for further information. We are not acting as your investment advisor nor providing investment recommendations in respect of any transaction effected through the Online Mutual Funds platform, and you must not regard it or us as acting in that capacity. You should consult your own independent legal, tax and investment advisors before entering into any transaction via the Online Mutual Funds platform and only enter into a transaction if you have fully understood its nature, the contractual relationship into which you are entering, all relevant terms and conditions and the nature and extent of your exposure to loss.

Tax laws are subject to amendments from time to time. The user/investor needs to verify all the facts and circumstances with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of the above information.

Standard Chartered Bank, India having its corporate office at Crescenzo Building C-38/C-39 G Block, Bandra Kurla Complex, Bandra (East), Mumbai – 400051 is a licensed Corporate Agent of ICICI Prudential Life Insurance Company Limited for life insurance products, Royal Sundaram General Insurance Co. Limited and Bharti AXA General Insurance Company Limited for general insurance products and Max Bupa Health Insurance Company Limited (IRDAI Registration no. 145) for standalone health insurance products vide composite license number CA0028.

All figures shown here, if any are for illustrative purposes only. Actual premium calculations will vary from person to person.

Participation in any insurance scheme is purely voluntary, and is not linked to the availment of any other banking products or services from Standard Chartered Bank. The benefits/ features of the products are indicative only. For more details on risk factors and terms and conditions, please read sales brochure carefully before concluding sale. Insurance is the subject matter of solicitation.