How to begin an investment portfolio?

In finance, a portfolio is an appropriate mix of or collection of investments held by an institution or a private individual. In building up an investment portfolio a financial institution will typically conduct its own investment analysis, whilst a private individual may make use of the services of a financial advisor or a financial institution which offers portfolio management services. Holding a portfolio is part of an investment and risk-limiting strategy called diversification. By owning several assets, certain types of risk (in particular specific risk) can be reduced. The assets in the portfolio could include stocks, bonds, options, warrants, gold certificates, real estate, futures contracts, production facilities, or any other item that is expected to retain its value.

• DIY portfolio management reduces investing expense. When an investor moves from a full price broker to an online broker it reduces commission cost. Making your own buy/sell decisions eliminates the need for a manager and gets rid of the management fees, annual fees, quarterly fees, inactivity fees, planning fees and....... Well you get the picture. But it could also be a trap of your own making.
• For many investors the only way to invest is to find a good money manager and get help. (Consider the Vanguard Star fund(VGSTX) or the Dodge &Cox Balanced(DODBX) or invest in index funds like the Fidelity Spartan Equity Index (FUSEX) or Vanguard 500 Index (VFINX) for great "assisted" diversity) But for those intrepid souls who want to explore the possibility of DIY portfolio management there are some important things to consider.
• There are logical steps you should take to create your own successful investment portfolio: • First determine what you are saving for. The usual goals are education expenses, to buy a new home, or retirement. • Make a firm plan for the time frame of the investment. When will the children need college money, when do you plan to buy that dream home, how long is it to retirement. • Figure out how much you can comfortably afford to invest now and remember that you can change that amount later if you choose to increase it. • Remember that all investments carry some degree of risk. You could lose part or all of your initial investment. It is important to understand what your risk tolerance is. The lower the risk of a particular security the lower the expected return, and the higher the risk the higher the expected return.
• Before you begin the next step, (which is to actually put together the portfolio) you need to examine who you are and what your time constraints are. You need to examine; discipline, emotions, time constraints, knowledge level, and perseverance.