Portfolio Building Basics from Edward Jones

KENTWOOD, Mich. - June 25, 2015 - PRLog -- With any building project, it's important to have the right tools and components. Investing is no different. The following guidelines should assist you in this process.

Diversify, Diversify, Diversify
No one can consistently predict how markets will act. Since investment types can perform differently under various market conditions, it is important for investors to have a variety of growth investments and income investments.

Understanding the Investment Pyramid will help you determine how to diversify your portfolio.

Select High-quality Investments
The soundness of your overall investment strategy is only as good as the quality of the individual investments you own. No single attribute defines quality, but we recommend that our clients look for well-managed companies with long track records of growth and performance. Growth is shared with stockholders in the form of increasing dividends. Many high-quality companies can boast of 10, 20, or even 30 years of consecutive dividend increases.

Think Globally
Three-fourths of the world's stocks are traded outside the United States. Many opportunities for growth exist internationally. By investing globally through a professionally managed, well-diversified mutual fund, you can reduce the risks of global investing and potentially enhance your return.

Ladder Income Investments
"Laddering," or staggering the maturities of your income investments can produce a more reliable stream of income.

Since no one can foresee where interest rates will be in the future, spreading your income investments over a wide range of maturities (i.e., 5, 10, 15 and 30 years) will lessen the risk that all your money comes due when rates are low, making reinvestment less attractive.

Since short-term bonds and CDs mature earlier, they can provide you with funds for unexpected expenses, while intermediate and longer-term bonds can lock in potentially higher rates.

Review Your Portfolio
While we advocate a buy-and-hold strategy for high-quality investments, it is important to understand that this does not mean buy and ignore. Even a portfolio of carefully selected investments needs to be reviewed periodically to make sure it still meets your needs.

Request a free portfolio review from your local Edward Jones financial advisor today.