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The Ultimate Beginner’s Guide to Building an Investment Portfolio

Even if it sounds intimidating at first, building an investment portfolio may be one of the best things you could do to protect and grow the value of your existing wealth. On top of allowing you to generate passive income, an investment portfolio can eventually serve as a hedge against inflation and a means to achieve long-term financial goals such as retirement, homeownership, or funding your education. 

As a complete beginner, you actually have various accessible investment options available to you that can help you start this journey with confidence and clarity. These include the following: 

Digital Banking and Fintech Platforms

It might come as a surprise, but one of the most accessible investment options for everyday consumers can be found on their phones. In the Philippines, a top digital bank like Maya presents investment opportunities that people can use at a click of a button. 

Maya Savings, for one, offers interest rates that are much higher than a typical savings account offered by a traditional bank. It gets even better when you open a short-term Personal Goal account, which has a starting interest rate of 4% p.a., or a Time Deposit account, which offers up to 6% p.a. What’s more, it’s also possible to check out cryptocurrency investments, cryptocurrency trading, stocks, and funds using the Maya app. To get started on investing and building your future portfolio, download the app, register for an account, and choose an investment product that fits your financial goals.

Cooperative Investments

Cooperatives have established themselves as important economic actors in a country like the Philippines, and many communities see them as a way to attain sustainable economic growth as a collective. Gaining membership in a cooperative can actually bring you closer to investment opportunities that are very beginner-friendly, such as share capital and time deposits with competitive interest rates. You’ll also be able to enjoy the rewards of seeing a whole community develop while you wait for your returns. 

Mutual Funds

A mutual fund refers to a diversified portfolio of stocks, bonds, or other securities. This type of investment is managed by professionals, and it’s funded using pool money put together by many investors. 

You can contribute your funds to the pool money with the assistance of banks, investment firms, and online platforms. Get started by opening an account with a financial institution offering mutual funds, then choose a fund that aligns with your financial goals and risk tolerance. Make a conservative initial investment and see how much more you want to invest as time goes by. 

Unit Investment Trust Funds (UITFs)

UITFs are similar to mutual funds, but are offered by banks. These funds pool money from various investors to invest in a diversified portfolio managed by the bank’s trust department. UITFs are accessible and convenient for beginners as they can be purchased directly from a bank and come with the expert guidance of dedicated fund managers. 

The Stock Market

Investing in individual stocks involves buying shares of companies listed on a stock exchange. This type of investment can offer high returns, but comes with higher risk. Beginners can start by opening a trading account with a brokerage firm, which also often provides educational resources, research tools, and easy-to-use interfaces to help them make informed investment decisions.

Government Securities

Government securities are low-risk investments issued by the government. These are suitable for beginners seeking stable returns. You can purchase government securities through banks and authorized dealers. 

A Few Things to Consider as You Build Your Investment Portfolio

Of course, building your investment portfolio does not stop with merely knowing your investment options. It’s also a must to understand how to put together a collection of investments that suit your specific situation and financial objectives. Here are some of the things you should take note of: 

1) You Should Assess Your Financial Situation

Before investing, ensure that you are in a financially sound position. This means having an emergency fund, being free from high-interest debt, and having a stable income. Your financial stability allows you to invest with a clear mind and reduces the risk of needing to liquidate your investments prematurely.

2) You Should Know Your Risk Tolerance

Risk tolerance refers to your ability and willingness to endure market volatility and potential losses. Assess your risk tolerance by considering factors such as your financial goals, time horizon, and personal comfort with risk. This assessment helps you choose investments that align with your ability to handle market fluctuations.

3) You Should Determine Your Investment Horizon

Your investment horizon is the length of time you plan to hold your investments in your portfolio before needing the funds. Longer horizons allow for more aggressive investment strategies, while shorter horizons may require more conservative approaches. Define your investment horizon based on your financial goals, such as retirement or purchasing a home.

4) You Should Choose Your Investments Wisely

You’re best served by investments that align with your risk tolerance and investment horizon. Diversify your portfolio by spreading investments across different asset classes, such as stocks and mutual funds. Diversification reduces risk by ensuring that poor performance in one investment does not significantly impact your overall portfolio.

5) Aim to Start Small and Then Scale Up

Starting small allows you to learn without risking significant capital. Begin with small investments to get comfortable with the process. As you gain experience and confidence at managing different assets, gradually increase your investment amounts. 

Investing is no longer exclusive to the well-off; today, financial platforms and products from both the private sector and the government make it possible for everyday consumers to become investors. As a beginner, start by learning about the accessible investment options available to you and aim to follow a structured approach to building your portfolio.

For both beginner investors and seasoned investors, the key to success lies in staying informed, disciplined, and patient. With the right knowledge and strategy, you’ll be able to use your investment portfolio to achieve your financial goals and secure a prosperous future for yourself. 


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