A stock portfolio is simply a collection of stocks you own. They don't have to be any particular stocks. They just have to be yours. Balancing your portfolio with stocks of many types can help you achieve more financial security. Your stock portfolio might contain as few as two or three stocks. Of course, the less money you have, the more difficult it is to diversify your stocks for balance.
Step 1
Open a brokerage account if you have several thousand dollars. You should open an account online without using a broker to receive the most reasonable fees when you purchase. A live broker often charges $24 or more to trade for you, but you can make the trade yourself online for far less, sometimes even for free if you have enough money in the account. Select stocks from companies you trust and try to vary them by industry, size of company and whether they give dividends or not.
Step 2
Investigate the use of direct purchase plans (DPPs) to start your portfolio if you're short on cash. You buy the stock directly from the company for a direct purchase plan. Often, companies allow you to set up a monthly automatic plan where you can purchase individual shares and a fraction of shares with a specified monthly investment. For information on companies that offer these types of plans, see the Resource section.
Step 3
Use a folio service to purchase shares of specified stocks each month. One of the newer types of investing is with folio services. It's an opportunity to purchase several stocks in small amounts or a fraction of shares without paying a brokerage fee on each stock. While the minimum investments vary, you might invest as little as $75 per month and purchase several different companies at one monthly flat fee. You can also purchase fractional shares. Several companies offer this service. Each has a different minimum and rules.
Step 4
Buy an index. Use exchange-traded funds that contain all stocks on the exchange you select. While you won't have individual stocks, you will have a portfolio of many different stocks in one share.
Step 5
Choose your stock wisely. Look for stocks from companies whose products you use. If you think a particular company has poor customer service and a crummy product, don't buy its stock, no matter what the experts say.
Step 6
Diversify your investments. Make certain you have stocks from companies that offer varied products. Don't simply buy all bank stocks or technology stocks. Get some of every type of industry. In the '90s, technology stock was soaring and then started to drop like a rock. People that had all their money in that type of stock lost almost everything. Vary your stocks by the size of the company. Also, consider whether they reinvest their profits into the company or offer dividends.