Individuals buy the stocks of different companies in hopes of earning a financial return, whether from capital gains or dividends. Creating a good stock portfolio isn't easy. Savvy investors follow a few simple rules when building their portfolios.
Diversification
A good stock portfolio contains an assortment of different types of individual investments. For example, a well-diversified portfolio contains a mix of risky and low-risk stocks, national and international stocks and a set of stocks deemed growth or value stock.
Size
A good stock portfolio requires 10 to 15 individual stocks. The fewer the number of stocks, the higher the vulnerability of the portfolio. Investors with more money or investments may have a larger portfolio, which improves the diversification and potentially increases the return of the portfolio.
Considerations
The type of stock affects a stock portfolio. Long-term investments tend to be growth or value stocks held for a longer time than other stocks. Long-run stocks rebound from downturns or sluggish economic times, if the company behind the stock is strong. Experts agree that good portfolios contain a number of long-term stocks.
