Title: the major steps in the construction of an investment portfolio.

Constructing an investment portfolio is all about choosing a range ofinvestmentsthat are targeted at meeting your goals & objectives at a level ofinvestment riskthat you're comfortable with. The key elements are asset allocation followed by the specificinvestment selection. You will first need to choose the type of account you wish to open, as that will have a bearing on how youconstruct your investment portfolio.The following are the steps of constructing an investment portfolio;

1.Assess the Current Situation

The future planning requires having a clear knowledge of an investor's current situation in link to where they want to be. That requires a thorough assessment of current assets, liabilities, cash flow and investments in light of the investor's most important goals. Goals need to be clearly defined and quantified so that the assessment can identify any gaps between the current investment strategy and the stated goals.

2.Establish Investment Objectives

Establishing investment objectives centers on identifying the investor's risk-return profile. Determining how much risk an investor is willing and able to assume, and how much volatility the investor can withstand, is key to formulating a portfolio strategy that can deliver the required returns with an acceptable level of risk.

3.Determine Asset Allocation

Using the risk-return profile, an investor can develop an asset allocation strategy. Selecting from various asset classes and investment options, the investor can allocate assets in a way that achieves optimum diversification while targeting the expected returns.

4.Select Investment Options

Personal investments are selected based on the parameters of the asset allocation strategy and the specific investment type selected depends in large part on the investor's preference for active or passive management.

5.Monitor, Measure and Rebalance

The management process begins immediately after implementing a portfolio plan. This includes monitoring the investments and measuring the portfolio's performance relative to the benchmarks.

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