Why Shares Should Be a Part of Your Wealth Portfolio

Creating wealth is easy enough if you have the right kind of work ethic, but using that wealth you have created to build yourself a financial portfolio is another thing entirely. This next step in wealth creation is one that people might be hesitant to take, but with the right information and the right kind of advice, this is the step that could see you earning yourself a true fortune for the future.

The base portfolio

A financial portfolio consists of any assets that you have that contribute to your overall net worth. For many, that means equity in a home or a nice savings account with a bank or financial institution. While these are fantastic foundations to a wealth portfolio, they may not be making you as much as you could be earning for your financial future.

Diversification is one of the biggest and most commonly referenced terms in the financial world and put simply, this means that you should be spreading your wealth throughout several different areas to ensure that you are making the most out of what you already have.

Why shares are an important part of your plan

While investing in the share market anywhere in the world may feel a little daunting, there are many easy ways in which you can take the first steps. Through the use of a simple app, you can buy stocks in Australia from anywhere in the world or invest your money into the next big thing to come out of Wall Street.

A share portfolio is an important part of your collective wealth as it usually contains a number of investments in multiple companies. This is the ultimate diversification. By creating a balanced share portfolio, you could be investing in a wide range of businesses meaning that if any of your investments take a hit, your other investments are still likely to retain or even grow in value which will compensate for any losses.

No risk, no reward

No matter which country you choose to invest in, the share market is not a sure thing like an interest-earning bank account. There is always some degree of risk when investing in shares as you are depending on the companies you invest in to turn a profit, which will increase the value of your holdings. With that being said, a healthy share portfolio also has the potential to create much higher returns than the savings that you have at the bank.

When you look at your wealth portfolio as a whole, there will always be some measure of risk and the beauty of creating a share portfolio is that you can decide how risky you want it to be. Those who are investing for the long-term might prefer a more balanced or low-risk portfolio that is likely to deliver over time while others might be looking for the big rewards that can sometimes come with a little risk. The choice is inevitably yours as to how daring you want to be.

With this added level of diversification in investing your accumulated wealth, there is potential that you can watch it grow at a much more rapid pace than alternative forms of investment. With the right amount of research and balanced out with other kinds of investments a share portfolio can be a fantastic addition that can help you to build your own personal wealth.

Photo by George Morina