What to Remember While Building a Financial Portfolio

  • Updated on: 10 Apr 2023
  • Published on: 27 Dec 2019
What to Remember While Building a Financial Portfolio

A financial portfolio is a comprehensive collection of assets – stocks, bonds, liabilities, cash equivalents etc. Of course, it’s likely to consist of non publicly tradable securities as well, like art or real estate. A financial portfolio is usually held directly by investors, but can be managed by financial managers, or accountants. 

Building a stable, and solid financial portfolio is a crucial task for investors, as it often reflects how much or for how long an investor can, and is planning to invest. Portfolios are of paramount importance to financial managers, as they help in a ‘risk assessment’ exercise – assisting advisors in targeting the right investment opportunities based on the nature of a client’s past investments. Portfolios can be made for a range of requirements, like saving for retirement, short term wealth goals, or to some – just more money and income.

As may be obvious by now, a financial portfolio is a very important tool. To help you create a strong portfolio, here are some items you may want to consider on your financial journey:

Focus on Loans and Debts

The first step is to identify what you owe and what you have, and then create a strategy to minimize your debts. Conduct a comprehensive calculation of all the interest rates on your credit lines and get an idea on how quickly they can be paid. Start with your biggest loans. Create a balance sheet with as much detail as possible, and keep it in line with your long term financial goals. 

Invest in Long and Short Term Instruments

Set aside money for the future, by identifying suitable long and short term investment avenues. Diversify your investments via bonds, shares, commodities, enterprises etc. Weigh the risk factor, the lock in period, the returns and other benefits like tax deductions while investing. Develop a comprehensive investment strategy tailored to your goals and make sure to follow it with discipline.

Start As Soon As Possible

It is always recommended to start as early as possible, so that you have longer time frame to build and grow your portfolio. There is also an added advantage of lesser financial commitments early in life, which should result not only in your portfolio being stronger and more diverse, but also having enough resilience to ensure that it can withstand any financial shocks and disruptions. Also, there’s the obvious benefit of gaining valuable experience, which will increase your financial experience and wisdom.

Regularly Track Your Investments

One of the best ways to manage your portfolio is to continuously track your investments. For a constant income, ensure that you invest on a regular basis rather than in short spurts. By monitoring your investments, you can cut your losses by identifying the investments that seem poised for low returns. Such investments must be sold immediately to protect your portfolio’s performance.

Tax Liabilities

Managing a financial portfolio also involves managing all your tax liabilities. An investment in a tax deferred account will increase your wealth faster than investment in a tax liable account. Since you might have to pay taxes on your investments, do proper research and consider investing in places where you can take advantage of tax savings and decrease your taxable income. An example: Section 80C of the Indian Income Tax Act.


A strong financial portfolio is an indicator of wise investments, and to minimize your losses be sure to diversify your investments. No investment is 100% risk free, of course, but by careful evaluation of opportunities and investing small amounts in a variety of sources, you can minimize your risk and reap maximum benefits. You can also employ professional fund managers to identify risks and opportunities, which will help in streamlining your investments and building a tailor made portfolio.


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