How to build an investment portfolio

One of the first steps in investing is building a portfolio that’s right for your situation. A portfolio is a mix of stocks, bonds and cash, as well as funds that hold a combination of these assets. Building your portfolio might seem intimidating at first, but you can do it if you follow an old and familiar idea: don’t put all your eggs in one basket.

Asset allocation and diversification are the two main principles that can help make it happen. “Asset allocation” just means putting your money in a range of investment types, to help manage risk. Typically, these investments include stocks (also known as “equities”), bonds (or “fixed income”) and short-term investments such as cash.

Investment types

“Diversification” means spreading out your investments in each of those investment types. By investing in different companies, industries, countries and business sizes, you’ll potentially have better chances for regular growth, because your portfolio won’t be dependent on the performance of any one investment.

Which investment types make sense for you depends on a number of important factors, including your financial situation, tolerance for risk and time horizon.

When you’re young and far away from retirement, you may be open to taking more risk. In this scenario you might have most, if not all, of your investments in domestic and foreign stocks – but it’s important to remember that you will need to be comfortable with wide fluctuations in market values, especially in the short term.

As you get closer to retirement, your appetite for risk may decrease. At this stage, it’s generally a good idea to start shifting your investment mix to include more bonds and short-term investments, to help reduce the overall risk to your portfolio.

All this doesn’t mean you have to buy and trade individual stocks or bonds on your own. Most investors gain exposure to various assets by investing in mutual funds and ETFs, which allow you to invest in a large number of stocks and bonds through a single purchase.

Once you’ve established an investment mix, you’ll need to keep it on track by rebalancing and adding to your savings through regular investing.

What is rebalancing?

“Rebalancing” means regularly monitoring and adjusting your portfolio so your asset allocation and diversification remain consistent with your selected investment mix. Think of it as doing routine maintenance, like taking your car in for an oil change to help performance and protect against larger problems down the road.

Regular investing, ongoing contributions to your investments, is a fancy way of saying “save on a schedule.” It may be one of the most important things you can do to help maximize your retirement savings.

Tips for regular investing

  1. Figure out how often you want to invest: weekly, monthly or every paycheque.
  2. When picking a dollar amount to invest, try to find a balance between stretching yourself and keeping it manageable.
  3. Consider automating the process with direct deposits or automatic fund transfers. If you stick to your plan, contributions can really add up.



Commissions, fees and expenses may be associated with investment funds. Read a fund’s prospectus or offering memorandum and speak to an advisor before investing.  Funds are not guaranteed, their values change frequently and investors may experience a gain or loss.  Past performance may not be repeated.

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This site is for persons in Canada only.  Mutual funds and ETFs sponsored by Fidelity Investments Canada ULC are only qualified for sale in the provinces and territories of Canada.

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