Five Key Concepts in Portfolio Building For Optimal Results

Most of my baby boomer clients come to me believing that getting the highest returns on their portfolio will give them the most money at retirement. I wish that were true but in reality most people don't get the more money by following the hot markets each year. You don't have to come up short in your investment performance and you can sleep better every night by following these 5 key concepts:

1. Stay diversified over various asset classes no matter what the economy is doing; that way you will have winners with your losers and your average investment return has the potential to be in the positive even in down markets. Low consistent returns will always win out over boom and bust returns in the long haul.

2. Keep your expenses low. Stay away from load funds and individual stocks. Buy no-load mutual funds and ETFs (Exchange traded Funds) with low trading fees. This is the best way you get to keep more of what you earn invested for you- not your broker.

3. Keep your sights on the long term. Don't invest unless you plan to stay in the market for five to ten years. Invest to get the return that you need for the goal that you have set. Switching every day or quarter is for day traders and poker players. Keep the odds in your favor- stay in.

4. Watch your risk level. The more cash and bonds you have, the less risk you have in your portfolio. If your risk level allows you to sleep at night but won't help you meet your required return for your goal- then change the goal.

5. Goals are the glue that keeps this train running year after year. Write them down. Share them with your spouse, kids, significant others, and relatives. Dream big. If you build a portfolio based on your goals then it will be that much harder to break your investment piggy bank for something foolish. Always keep your goals in mind when investing.

No matter how much money you have lost in the past, you can start building an investment portfolio now with these key concepts. Stop worrying about the economy and start enjoying a portfolio based on the goals you set, the return you need (minus expenses) to reach your goal, and the risk that you are comfortable with.

Interested in more wealth building tips by Fern Alix LaRocca, a fee-only Certified Financial Planner with over 24 years in the industry? Get this and 4 free portfolio building reports at http://www.wholeheartedway.com

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