How to Build Complete Financial Portfolio for Mutual Funds?

No two individuals can be entirely similar. For the same reason, the financial portfolio of two individuals can never be identical. Your financial objectives, income, life goals, and risk appetite can significantly vary from others. As a result, it is necessary to build a financial portfolio that aligns with you and your needs and expectations.So, how do you create a custom financial portfolio? Here are the steps you can follow-

The first step to build a personalized portfolio is determining your asset allocation. Consider factors such as your personality, investment objectives, time frame, life goals, and risk tolerance for appropriate allocation.For instance, a young and aggressive investor with no dependents can consider investing most of his/her money in equities, followed by debt and other fixed-income assets. But it can be the exact opposite for a conservative investor in his 40s with dependents.

Once asset allocation is done, the next important step is to build the portfolio. You can consider options such as stocks, mutual funds, ETFs (Exchange-Traded Funds) , and fixed-income bonds or FDs. Divide your money as per your asset allocation into all of these popular investment options.But note that you should analyse every single asset's potential and quality before making the investment decision.

Once you’ve built a complete financial portfolio, you should track it regularly and rebalance the same when needed. For instance, after a few months, if you think that you are overweight in small-cap equities, which is proving very risky for your portfolio, you can rebalance some part of the equity investment into other safer avenues such as liquid mutual funds.Ensure that you also consider the tax aspect of all the investments so that your portfolio is also highly tax-efficient.

Creating a financial portfolio of your own is not as complicated as it appears to be. Start small, and you can always learn along the way.But if you are fairly new to investments and want to invest a considerable amount, make sure that you consider an investment advisor's professional assistance.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.