How to build a strong financial portfolio

In recent years, about 75% of young people have invested or are considering to embark on a new adventure by starting to invest their savings. What is it that drives so many people to take this path? Investing is a way to give money the opportunity to mature and grow over time. While seeming like an easy way to generate growth from a financial point of view, attention should be paid to possible risks. In fact, investing can be very dangerous, since every investment will always be subject to continuous market fluctuations. That is precisely what makes investment outcomes unsafe and unpredictable. As a matter of fact, when you embark on this type of path it is very important to be prepared to suffer lossesand also to get much less than you hoped for. If you are looking for a way to minimise any possible risk, this is where financial planning comes into play. To wisely and carefully plan your every economic move is in fact crucial to try to reduce risks and to build a solid economic portfolio. You can also check this Moneyfarm blog post to find out more about the matter.

Is investing worth it?

Being investments that risky and able to lead to financial losses, it is very important to carefully plan every move in this area in order to try to get the most out of one’s investments. This is why, before embarking on this path, it is crucial to have some savings aside. Starting to invest your savings when you are in debt or when you are struggling to financially support yourself and your family is never a good idea. If you are unsure whether investing is worthwhile, you can always rely on the advice of a financial advisor: an expert will surely be able to assess your situation and help you understand whether this is a viable option or not. Moreover, professionals will surely be able to help you build your financial portfolio in the best possible way, by adding assets according to your needs and your risk tolerance as well.

What is a financial portfolio and why it is so important

A financial portfolio, also called economic portfolio, or investment portfolio represents a set of properties and assets on which you will base all your investments. What is the first rule for building a solid portfolio? The key is diversification. In fact, by diversifying the properties within it as much as possible, you may be able to minimise the impact of a possible bad investment on others. By always investing in the same area, on the other hand, it is possible that a bad investment has tragic financial consequences on others. This happens because every investment reacts in a different way depending on the area in which it is made. If you want to know how to create your financial portfolio, you can still entrust a counsellor who will help you choose the best economic areas according to your predilections, needs and risk profile. Today, you can also rely on the assistance of some online platforms called robo-advisors, which consist of digital counsellors specifically designed to help you build and manage your portfolio. These platforms work thanks to an algorithm that requires little or no human supervision at all. But how does it work? A robo-advisor is designed to ask very specific questions about your economic situation, your life goals and financial ambitions through an online survey. The information will be then used to offer you financial advice and, in some cases, to automatically invest your money according to your profile.