11 Key Steps To Build A Well-Balanced Stock Portfolio

Steps To Build A Well-Balanced Stock Portfolio. Beautiful women with a piggy bank to explain the concept of well-balanced stock portfolio.

(8) Start Accumulating Stocks At Cost-Effective Price

It is one of the most popular steps to build a well-balanced stock portfolio. Everyone knows to buy low & sell high to make money in stock markets. But, it doesn’t mean that you should buy any stocks that are trading at lower valuations.

It is because certain stocks trade low as they deserve for lower valuations. Similarly, there are certain junk stocks that continue to decline with time.

You should always invest wisely to prevent accumulation of value traps. Investors should buy only the value stocks rather than value traps. It means buying stocks that are trading lower than their actual worth.

Value investments are usually determined by comparing intrinsic market value against company’s current stock price. In this process, you need to avoid short-term volatility in stock markets.

[Read Also: 20 Tricky Ways To Identify & Avoid Value Traps in Stocks]

(9) Stay Invested For At Least A Year

It is one of the most wonderful steps to build a well-balanced stock portfolio. Like every investment, stock investment also needs some time to reap its true benefits. It is even true when you are invested in fundamentally good stocks.

You should always give reasonable time to the stock, say for a period of one year, without selling your shares. This money should not be withdrawn from stock markets for a period of one to 5 years or more.

In order to meet your short-term money needs, it will be better to invest in short-term investments. Some of the popular short-term investment options include money-market accounts, CDs, U.S. Treasury bonds, bills or notes.

A long term scenario is also significant to lessen the situations when one or more sector you invested in starts declining. It will remain strong over time & will recover significantly on return of favorable market conditions.

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