Building a Portfolio
Learn how to construct a diversified investment portfolio that matches your goals and risk tolerance
What is an Investment Portfolio?
An investment portfolio is your complete collection of investments - stocks, bonds, funds, and other assets. Think of it as a basket holding all your investments, carefully arranged to work together toward your financial goals.
Key Portfolio Components:
- Asset Classes: Different types of investments (stocks, bonds, cash)
- Geographic Diversification: NZ and international investments
- Sector Exposure: Investments across different industries
- Risk Balance: Mix of conservative and growth investments
Remember: Your portfolio is unique to you. What works for your friend or colleague might not be right for your situation, goals, and risk tolerance.
Portfolio Allocation Calculator
Use this calculator to find a suggested asset allocation based on your age and risk tolerance.
Recommended Allocation
Dollar Amounts
Stocks:
$8,000
Bonds:
$2,000
Note: This is a general guideline. Consider your specific circumstances, goals, and consult a financial advisor for personalised advice.
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Sample Portfolio Models
Here are some common portfolio models to consider. Remember, these are starting points - you can adjust based on your specific needs.
Conservative Portfolio
Focus on capital preservation
Balanced Portfolio
Mix of growth and stability
Growth Portfolio
Focus on long-term growth
Aggressive Portfolio
Maximum growth potential
Diversification Strategies
Diversification is your portfolio's best defense. Don't put all your eggs in one basket - spread your risk across different investments.
Asset Class Diversification
Geographic Diversification
Sector Diversification
Portfolio Rebalancing
Over time, your portfolio will drift from its target allocation as different investments perform differently. Rebalancing brings it back to target.
Common Portfolio Mistakes to Avoid
Over-concentration
Having too much in one stock, sector, or asset class. No single investment should be more than 5-10% of your portfolio.
Home Country Bias
Investing too heavily in NZ. The NZ market is only 0.2% of global markets - don't miss out on global opportunities.
Ignoring Costs
High fees compound over time. A 1% difference in fees can cost you hundreds of thousands over 30 years.
Emotional Decisions
Panic selling in downturns or greed buying in bubbles. Stick to your plan and rebalance systematically.
Over-complication
You don't need 20 different funds. A simple 2-4 fund portfolio can provide excellent diversification.
Ready to Build Your Portfolio?
Quick Portfolio Tips
- •Start simple with 2-3 index funds
- •Review allocation yearly, not daily
- •Keep costs below 0.5% total
- •Automate contributions
- •Stay the course in downturns
Simple Starting Portfolio
- • 40% NZ/AU index fund
- • 40% International index fund
- • 20% Bond index fund