3 Ways to Build an Investment Portfolio

1. Use a Brokerage Firm to Build a Portfolio

Perhaps the easiest way to build an investment portfolio is through the services of a brokerage or investment firm. Set up a meeting with a potential investment manager who will be responsible for investing your funds. Prepare yourself to answer a series of questions regarding your current financial situation, funds available for investment and the goals you have for investing. Let the broker know if you are more interested in short-term or long-term results, because saving for retirement in 35 years is different than saving for college in 8 years. The broker may present several investment strategies for you to choose from, including stocks, bonds, mutual funds and futures.

Pay close attention to how well you are received and listened to during the meeting to determine whether or not you will work with the broker. Get a complete list of the fees charged by the brokerage firm for online, telephone and assisted trades, as well as for account and other miscellaneous fees. In addition, find out what the minimum balances are for accounts with the firm. Remember that discount brokerage firms often charge less because they offer less support. Likewise, full-service brokerage firms charge more for increased support.

2. Always Participate in Your Company's 401(k) Offer

Many companies offer employees a 401(k) plan, allowing them to put non-taxable income into a portfolio managed by an investment company, insurance company or bank trust department chosen by the employer. When you invest in your employer's retirement plan, you can often double the value of your account immediately, because most companies offer a system to match your contributions. You won't pay taxes on the funds in a 401(k) account until they are withdrawn, preferably upon retirement. If you withdraw the retirement funds early, you will pay a hefty 10-percent penalty, plus taxes.

3. Manage Your Own Investment Portfolio

You can purchase your own stocks, bonds and mutual funds online for set fees. While you are officially working through a discount broker, you can buy and sell investments in your portfolio as often as you desire without speaking with anyone. You will need to research companies you want to invest in, initiate buys and sells, track values and stay abreast of market trends and new investment opportunities.