To make a proper retirement portfolio, an investor should remain concerned about the diversification of the portfolio. The portfolio diversification is such a strategy which can provide both security and growth to the investment. Picking up the right investment areas and mixing them properly is the key of an appropriate portfolio. The investment market never remains same.
Todays favorite stocks can become an instrument of loss in the future. The trends of the market shifts rapidly and because of these shifts, making prediction about the market is next to impossible and hence, the diversification of the retirement portfolios are very important.
Before designing the retirement portfolio, the investor should also consider the recent swings in the selected sectors. There are investors who are interested in the sector specific funds. But the investments should be balanced and one should remain cautious about the turn-abouts.
The next important factor is the percentage of amounts to be invested in the stocks and bonds. Stocks are the popular investment option for a long time and a well planned investment in the stocks can produce an annual return of more than 10%. On the other hand there are also some risk factors, which are related to the stocks. As stock investment is a bit risky, there are some investors who prefers to put the money in bonds which are less risky though the returns are not so high. Mutual funds are the best option which can be included in the retirement portfolios because the risk factors are low and the returns are comparatively higher.
At the same time, one should remain cautious about the amount of time left in the retirement and the portfolios should be built according to that. There are several types of portfolios which are offered by different companies and one can invest money in them also. These retirement portfolios generally invest the money in the large foreign and domestic companies, index funds and actively managed funds.