Creating a perfect and balanced portfolio is quite a task, I should say. One needs to think all of the actions through as well as go through a pretty rough process of choosing the assets for your portfolio. And this process can take a lot of time. Especially if you do not know what to start with. And of course we shouldn’t forget that a portfolio should be profitable.

But before all that you should make sure that all of your other financial obligations are taken care of and that you are not going to leave anything without your attention.

And so. Let’s see what you should do before forming your portfolio.

 

1. You should take care of pension fund.

2. Make sure your emergency funds are untouched.

3. Take care of your immediate future.

4. Rest.

5. Study.

 

1. You should take care of pension fund.

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Top up your pension fund as much as you can. Of course you are going to have to pour a lot of money into it, for the matter to be closed for at least several years for you, but in the end you are investing into your future here. And trading with the money which was meant for the pension fund might mean that in the end you have nothing to invest into it.

 

2. Make sure your emergency funds are untouched.

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Trading is a risky business. And before going into the markets and risking your money, you should make sure that you are going to have some kind of financial pillow to fall onto. What if the value of your portfolio goes down suddenly and you have nothing or very little left? What do you do then?

Of course for this case you are going to have to need a backup. And before starting to form a portfolio, you need to make sure that the pillow is still there and that it is as soft as you need it to be, if you know what I mean.

 

3. Take care of your immediate future.

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Once again – forming and subsequently holding a portfolio can be risky. And the more volatile assets you are going to include into it, the more risks you are imposing onto yourself. That means that in your future you might come across the situation where you need the money, but it would all be gone.

Does that sound appealing to you?

No. Of course not. That is why some of the money are going to have to go into your ‘Immediate future’ fund. Just for even more safety net.

 

4. Rest.

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Trading and forming your portfolio is a very demanding thing. You are going to spend a lot of time and energy bringing it to life. So, before you start the process I suggest that you take your vacation. Of course I would not recommend wasting all of your money for it, but taking your family to a nice resort and relaxing by the pool sounds just heavenly.

Of course you can also just read a book in your home hammock while the kids are away at school. That works just as fine too.

 

5. Study.

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You should learn everything there is to learn about forming a successful and profitable portfolio. Read books, watch tutorial and hire a financial advisor. That is going to pay off, I promise. After all, if I have learned anything through years of trading is that no bit of information is going to be an access one. Everything is going to find its use one day.

So never hesitate to attend another seminar or read another book on the subject.