Q:

How do you set up a personal stock portfolio?

A:

Quick Answer

In order to set up a personal stock portfolio, set investment goals, decide on a risk level, choose stocks that fit those goals and purchase them. Investors can purchase stocks from brokers.

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Full Answer

When making investments, it is always important to have goals. People who want to invest money during the short term should choose different stocks than people who want to invest in the long term. Long-term investors can take more risks as there is more time for ups and downs in the market to even out. Short-term investors should choose stocks that carry less risk as they must sell within a certain time frame, according to Market Watch.

Risk level should also play a role in choosing stocks. Although riskier stocks usually have higher returns, they also carry more potential for loss. Investors should ask themselves how much they can afford to lose and determinetheir personal tolerance for risk.

Investors should think about how they want to diversify their portfolios. Diversifying helps manage risk to some degree. If the market has a downturn, the chances of losing everything is higher if the portfolio only contains a single stock. Investors should include large American companies, small and medium-sized companies and international companies in their portfolios, as advised by Forbes magazine. They should dedicate more of their portfolios to large, established companies and less to smaller firms.

Once investors have set goals and decided how they want to allocate their money, they can buy stocks through a broker. They can choose traditional brokerage firms or use online brokerage accounts. They can order stocks by telling the broker how much of eachstock they would like to buy, as noted by the Wall Street Journal.

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