How to Start Building an Online Investment Portfolio

This is a guest post.

Choosing to invest in today’s economic climate can be risky business. On one hand, the market can be volatile even on the best of days. On the other hand, this means that sharp gains can be made in a shorter time period than usual. Another factor that is driving more and more consumers to take charge of their finances and start investing is the fact that you can do so much trading online these days. With online trading platforms and a wealth of tools to monitor your portfolio, you can start trading with very little start-up money or pre-existing knowledge of the markets. Yet if you’ve bought or sold a stock in your life, you may be wondering where to start.

Getting Started

Before you start purchasing any new financial products or opening up any new investment accounts, you’ll need to first sit down and make a list of all of your assets and debts. This will help you see what you already own and where you need to work on your financial health. It’s important to keep a realistic eye on paying off debts before you start investing elsewhere, because there is some element of risk involved even with the most secure investment opportunities. After you have taken stock of your current financial situation, the next step is to open up a brokerage account. You can do this through an online broker or trading platform, to begin with. This allows you to start purchasing stocks bonds, real estate, mutual funds, or other financial products online.

If you’d prefer not to begin with buying or selling any physical financial instruments, you could consider spread trading instead. This allows you to simply speculate whether the price of an instrument is going to rise or fall. If you are correct, then you will profit.

Financial spread betting can be a good short-term form of investment, because you will either experience profit or loss with a quick turnaround.

The Importance of Diversification

By balancing your online investment portfolio with a mix of risk and return, you will be able to achieve a higher rate of return over all and manage your risk. Spread betting, as described above, is a risky form of investment but it can be balanced out by buying and selling other physical properties with less risk and a lower rate of return. You can combine short and long term prospects, to avoid losing everything if one investment falls through. The goal is to have several different types of investments to fall back on. With so many different online trading platforms out there, you can buy into many different types of investments.

Investing in emerging markets is one type of investment that is considered to be higher in risk than some other options, but it can yield great rewards, particularly in today’s global economy. This can increase the geographic diversity of your portfolio. To balance this with an investment that’s lower in risk, you could purchase fixed income securities, such as corporate bonds or municipal securities. Real estate is also an essential part of any balanced investment portfolio, and commodities such as gold are considered to be a good hedge against inflation. These are but a few examples of the different types of diverse investments you could choose, to balance out your portfolio.

What to Look for in a Trading Platform

If you’re investing using online trading platforms, you’ll want to primarily make sure that they are secure. Other features to look for include access to news feeds, market charts, and email updates regarding your portfolio. You should be able to filter through the different types of commodities or investments with the use of search tools provided by the platform, so that everything you need to trade is in one handy place. This is why the doors of trading have opened up to more people than ever before, with the prevalence of these new online investment technologies.