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Wednesday, 6 July 2011

Questions on constructing a portfolio

When I first seriously thought about building an investment portfolio, I had a lot of questions that came to my mind. What I wanted was to build a portfolio that would help me build a sizable capital over a period of time. The plan was that I would add to the portfolio periodically and build up positions. The time-frame that I had (and still have) was around 15 years.

The questions at the top of my mind were:
  1. How many stocks should the portfolio hold?
  2. What is the maximum percentage that a single stock should be within the portfolio? 
  3. When should I sell? Should I have target prices?
  4. How much cash should be there in the portfolio?
  5. Should I have stop losses?
I though that answering these questions were very important to be prepared for building a log term portfolio. I will try to take you through my thoughts on each of these questions on subsequent posts.

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