How to Build Your Own Investment Portfolio
It starts with creating an investment plan, then following through.
Looking to put your money to work for the future? Having the right investments is critical, but don’t miss the first step: creating an investment plan. Whether you’ve already begun saving or are just starting out, it’s important to have a target in mind. That will help determine how much you need to put away, how much risk you should take and what investments you choose.
Here are four steps to help you build your own personalized investment portfolio, starting with a plan and ending with maintaining it.
1. Define Your Financial Goal(s)
Name It
Know what you're investing for. Is it retirement, a college education for yourself or a child, general investing to grow your current savings or some other goal?
Date It
Determine the time frame for when you'll need the money from your investment. Different goals may require different timelines and different strategies.
Estimate the Amount
Add up how much you may need for each goal. Our calculator can help you determine how much you may need to invest depending on timing and your goal amount.
2. Design or Modify Your Strategy
Investment strategies help you decide what to invest in, how to divide your portfolio among different investments and how much risk you are comfortable taking. Start by understanding yourself and then choose a mix of investments that fit.
Evaluate Your Risk Tolerance
Each person’s level of comfort with risk can be different. Knowing your comfort level can help you determine how much of the market's ups and downs you can live with and find balance in your portfolio. It can help you choose a mix of investments that might suit your situation, depending on how conservative or aggressive you want to be.
Remember that not taking enough risk with your investments is a risk in itself. A more aggressive portfolio may be appropriate for goals that are many years in the future, such as retirement for a person in their 20s and 30s. The opposite may be true for someone just a few years from retirement who doesn’t have time to recoup losses from a market downturn.
Diversify Your Investment Portfolio
Think about spreading your investments across different types of assets. Markets are unpredictable. Combining different investment types can help you better prepare for various market conditions and may also help provide more consistent, less rocky returns over time.
Diversification should go beyond the general categories of stocks, bonds and cash equivalents (like money markets). Each of these can be split further into more specialized categories to take advantage of different parts of the market.
For example, in the stock portion of your portfolio, you can choose funds that invest in companies of various sizes or locations (U.S. or non-U.S.). You can also choose funds that select companies based on a particular investing style, such as growth or value.
If you aren’t confident in building your own diversified portfolio, you could choose one of our already diversified solutions, which include multiple asset classes in a single portfolio.
Know Your Decision-Making Style
How will you manage your plan and portfolio? Will you do the research and regular portfolio reviews yourself, or will you also consult a professional for advice and recommendations?
3. Execute Your Plan by Choosing Investments
After you make critical decisions for your plan, it’s time to put it into action by selecting investments for your portfolio. Depending on where you are in the investor life cycle, that may mean investing in new funds, rebalancing or readjusting existing investments to align your portfolio with both your risk tolerance and goals.
Whether you choose the convenience of a portfolio built by our experts, create your own with our no-load funds, prefer a brokerage account for a variety of investment choices or want a portfolio entirely managed for you, you have choices.
Choose a Pre-Diversified Portfolio
No time or inclination to research and make all your own investment choices? Put our professional money managers to work for you with a pre-built portfolio based on your timeline or risk level.
Build Your Own Portfolio
Create a diversified portfolio with our broad lineup of no-load mutual funds. Our complete list includes stock, bond, asset allocation and money market funds for you to choose from.
Choose a Brokerage Account
Select from more than 10,000 mutual funds from other fund families, as well as ETFs, publicly traded stocks, bonds and more.
Get Personal Financial Advice
Don’t want to go it alone? You don’t have to. Choose our advice services, from a one-time session with a certified financial planner to in-depth, ongoing advice and planning.
4. Maintain Your Plan
With your plan set, it’s time to keep it working for you long-term. These strategies can help.
Make It Automatic
Set up periodic automatic investments to help ensure you're building on your investment and putting market swings to work for you. If you’re ready to start using your nest egg, you can establish automatic withdrawals.
Stay on Track
Market activity can lead to a lopsided portfolio and no longer match the level of risk you intended. It can also increase the risk that your fortunes rise and fall based on the performance of one country, sector, company or even stock style. Learn how rebalancing can help you manage risk in your portfolio.
Consolidate Accounts
Do you have money in several different accounts—two or more investment companies or your bank? Consolidating investment accounts may give you a clearer picture of your overall financial standing, including whether you’re properly diversified.
Review Portfolio
Life will change and your portfolio may need to as well. Don’t just set it and forget it. Did you marry, divorce or have a baby? Do you want to dial back your level of risk? Would you like to retire earlier than you originally planned? Your investment plan may need adjusting to reflect these new realities.
Keep a Long-Term View
It’s never too early to get started on building your own investment portfolio. The more time you have for your investments to grow and compound, the more likely you are to reach your goals. And we’re here to help you along the way, including offering advice options to help you make sense of your investing world.
This information is for educational purposes only and is not intended as a personalized recommendation or fiduciary advice. There are different options available for your retirement plan investments. You should consider all options before making a decision. Our representatives can help you evaluate all of your distribution options.
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
Diversification does not assure a profit nor does it protect against loss of principal.
You could lose money by investing in a mutual fund, even if through your employer's plan or an IRA. An investment in a mutual fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Rebalancing allows you to keep your asset allocation in line with your goals. It does not guarantee investment returns and does not eliminate risk.
American Century's advisory services are provided by American Century Investments Private Client Group, Inc., a registered investment advisor. These advisory services provide discretionary investment management for a fee. The amount of the fee and how it is charged depend on the advisory service you select. American Century’s financial consultants do not receive a portion or a range of the advisory fee paid. Contact us to learn more about the different advisory services. All investing involves the risk of losing money.
Brokerage Services are provided by American Century Brokerage, a division of American Century Investment Services, Inc., registered broker/dealer, member FINRA, SIPC.