Hello Friends and Family! I hope that you are doing well today. I just finished taking a walk and I am feeling well. While I was on my walk, I was thinking about one of my favorite friends and I was thinking about things that I like about her. One of the things that I like most about her is that she, like me, enjoys discussing building her investment portfolios. Do you have an investment portfolio? Well, that’s today’s topic.
What is an investment portfolio?
First, let me make sure that you know what an investment portfolio is. An investment portfolio is a collection of financial assets. There are three possible approaches to an investment portfolio.
First, there is the income approach. In this case, I am speaking of assets as things that you own that bring you income on a regular basis. Next, there is the growth portfolio approach. With a growth portfolio, the plan is to buy stocks that will grow in value, so that the stocks can later possibly be sold for a profit. The last is a value portfolio approach. In this last approach, the goal is to identify and purchase stocks that are undervalued. In other words, the goal is to find stocks that are trading for less that they are actually worth. Then the profit comes when the price rises.
Should I Have an Investment Portfolio?
Great question! Absolutely! Yes, you should have at least one investment portfolio. In fact, everyone should.
Why Should I Have an Investment Portfolio?
The first reason to have an investment portfolio is to grow your wealth. As you save for retirement, rather than saving cash, which would lose value due to inflation, most retirement funds are invested in stocks and stock funds.
A second and related reason to have an investment portfolio is having one is one way to spread your risk as you grow your wealth. Even if you invest in a retirement fund, you should have a goal of investing outside of your retirement fund. You may choose to invest in something like real estate. But, having a taxable investment account in addition to real estate would be a way to spread your investment risk out over multiple types of investments.
What are some things that I could put into my investment portfolio?
What you put into your investment portfolio should be based on your goals and your goals will most likely vary as you go through life. Your goals may be very different from my goals. But some examples of things that can be found in an investment portfolio include various types of stocks, bonds, and REITS.
Now, having said that we all have different goals, and that your goals are probably different from mine…
One Of Your Goals Should Be Preparing For Retirement As Soon As Possible!
No matter what other goals you may have, preparing for retirement right away should be one of your goals.
Now, I can’t tell you what to put into your retirement portfolio, because I am not a financial advisor, and I always suggest that you talk to your very own financial advisor. But, I will share with you one of the things that I put into my retirement accounts.
REITS
One of the things that I put into my retirement accounts is REITs. A REIT is a Real Estate Investment Trust. REIT shares are sold through brokerage houses.
Why Do I Like To Put REITs into My Retirement Accounts?
I like to put REITS into my retirement accounts for a combination of reasons.
First, REITs tend to have high dividend yields. The main reason for this is that REITs are required to pay out at least 90% of their taxable income annually to shareholders. Secondly, while the REIT dividends are great, they are taxed at a higher rate than stock dividends. Their dividends are taxed as ordinary income. So, in order for me to enjoy the benefit of the higher dividends, while not being taxed as ordinary income, I buy them in my retirement accounts.
I consider REITs purchased in Roth Individual Retirement Accounts one of my favorite investments. So, they are something that I suggest that you research them to see if they are something that you might like.
If You Already Have an Investment Portfolio For Your Retirement
If you already have an investment portfolio for your retirement, I suggest that you may want to consider a taxable investment account.
With a taxable investment account, you can grow wealth that you will be able to use prior to retirement. In fact, if you grow an income portfolio, you can grow a portfolio that can be used both prior to and during retirement, if you focus on using only a portion of the dividends. That’s so awesome!
So, there you have it!
Do you have an investment portfolio yet? (Either retirement or taxable?) Let me know in the comments.
Hugs and hoping that you have started at least one investment portfolio and that it’s growing fast!
Rich Mom
P.S. Keep in mind that you do not need a lot of money to start an investment portfolio. With some investment apps, like Robinhood, you can start investing with as little as $1.
Would you like to get more ideas about getting started with investing? Check out:
A Small Passive Income Is Better Than No Passive Income
Start Creating Passive Income Today
What is a Dividend Aristocrat?
Looking for financial resources? Check out the Rich Mom Poor Kid Resources Page.
Also, please note: I am not an investment advisor. Always do your own due diligence and research before investing. Check with your own investment advisor.
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