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Where to Invest & How to Choose an Investment Portfolio


Where to Invest & How to Choose an Investment Portfolio

Too often, busy lives and tight schedules prevent us from striving for financial freedom. When we hear the term investing, we think it's something for people that have excess money to spare. We are often intimidated when we hear about stocks, the market, and a bunch of numbers that sound gibberish.

Investing is simpler than it looks or sounds. All you need to do is take time to learn!

By the end of this article, you will have all the information about how to start investing, where to invest, and how to choose an investment portfolio. Let’s dive right into it!

What’s an Investment Portfolio?

The investment world has a unique language and several commonly used terms. One such term is an investment portfolio.

An investment portfolio is a collection of assets and includes investments like stocks, bonds, exchange-traded funds (ETFs), mutual funds, real estate, and other assets. Investment portfolios are more of a concept than a physical space, especially in this extremely digital age. Simply put, it's a collection of all your assets under one metaphorical roof.

Investment Options

There are a couple of investment options available, sometimes making it overwhelming for individuals just getting started. The jargon used by experts and financial media might seem complicated for beginners. Here’s a summary of some common options and what they entail:


These investments represent shares of ownership in a corporation. In simple terms, when you buy stocks, you become part owner of the corporation. Meaning you own a small percentage of the company in the form of shares. Investors make money either through dividends or by selling their shares for more than the original purchase price.


Bonds are like IOUs issued by entities to the investor with the promise of interest – often monthly – for a specified period, say 5 or 10 years. They are usually subject to inflation, credit risks, and interest. Moreover, they have different maturities. If not held to maturity, bonds may be worth less or more than their original value depending on changes in market conditions.

Real Estate

With real estate, there are multiple options for investing. For example, most people own residences as their only real estate investment, but others buy homes for rental income. There's even the option of buying a Real Estate Investment Trust (REIT). REIT allows owners to relax while the REIT manager handles the property management and upkeep and passes a portion of the rent to investors.

Mutual Funds and ETFs

These are portfolios of securities (stocks and bonds) put together by an investment company. Many investors prefer mutual funds and ETFs because these funds can hold dozens or hundreds of securities, offering greater diversification at a lower cost than investing in individual stocks and bonds.

This list is far from exhaustive since there are numerous investment options available.

How to Choose an Investment Portfolio?

As we mentioned earlier and repeated, multiple investment options may be confusing for potential investors. However, there are a few things to consider when deciding.

First, we must mention that investment portfolios are built based on the investor’s needs and preferences. That said, let's look at how to choose an investment portfolio.

Decide How Much You’re Willing to Invest

Take an introspective look at your personal finances and establish how much to allocate for investment. Once you get a clear picture of where you are today, you can plan accordingly. This is most likely informed by an investor's age, income, and short and long-term goals.

Assess Your Risk Tolerance

We cannot reiterate this enough – everyone is different when it comes to personality and willingness to take risks. Of course, everyone who chooses to invest has hopes of high returns. However, there's also the possibility of making losses. This shouldn't deter you from investing, nonetheless. Once you know how much risk you're willing to take, you can decide where to invest.

Diversify Your Portfolio

You’ve surely heard of the saying, “don’t put all your eggs in one basket”, right? This simple saying can be applied when investing. Spreading your investments across multiple assets reduces the risk of incurring losses.

Periodically Reassess and Rebalance Your Portfolio

The market conditions are constantly changing. So, a ‘set it and forget it’ approach to your portfolio could be a huge failure. Instead, ensure that you assess the current market situations and compare these to your owned assets. Some are bound to get out of whack, while others might take an upward trajectory.

When reassessing and rebalancing, you choose where to increase your investments, where to reduce, which assets to drop, etc. Moreover, your goals may change with time, and this is okay. So, take time to align your current goals with your investments. You might fall victim to market shifts more often when you don’t regularly analyze and plan accordingly.

Looking to Start Investing? Let’s Talk.

We understand that sometimes balancing work, family, social life, and extracurricular activities is enough of a task. So, when you throw investment into the picture, it becomes overwhelming for some. Luckily, wealth management is one of our specialties.

At Capitol Credit Union, we are happy to help you expand your investment. Our Wealth Management division is set up specifically to relieve any burdens of investment, financial planning, or insurance so you can focus on the things you enjoy the most. Get in touch with us today and schedule an appointment so you can improve your finances.

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