If you missed some of the challenge and would like to review previous days, you can view the previous days –-> here.

This training/challenge is for educational and informational purposes only.  These materials do not constitute a recommendation to engage in any particular securities transactions.

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Week 3: Slay It Up – Stock Diversification

This week it’s time for you to learn how to craft a suitable mix of investments.  Diversification and asset allocation help you build a foundation for investing in the stock market. This is a great place to start if you are a beginning investor or would like a refresher if you have already started on your investing journey.

Portfolio

A portfolio is a group of financial assets such as stocks, bonds, and cash, as well as other investment solutions including mutual funds, ETFs, annuities, etc.  When building your portfolio, you need to take into consideration your risk appetite and how long you have to meet your financial goals.

Think of your investment portfolio as a pie that is divided into pieces of different sizes.  Each slice represents a different asset classes and/or types of investments that you put together to meet your financial goals. Many different types of investments can be used to build a diversified portfolio, but for purposes of the challenge, we will focus on the slice of your pie that is stocks.  However, at some point, you should fill up your pie with the other slices that are bonds, cash and should include real estate, too.

Day 17 – Build Your Portfolio

In Day 16, we looked at developing an asset allocation strategy for your portfolio.  Today, we will take that one step further by looking for stocks in the sectors that you expressed interest in.  When building your portfolio, you want to include a mixture of growth, value, and income stocks.  There are growth, value, and income stocks in every sector, so don’t feel as though you have to invest in technology stocks to take advantage of growth stocks.  Again, there are opportunities for each category of stocks in each of the 11 sectors.

The percentage that you allocate to each of the categories and sectors will depend on your risk appetite.  You can use the following as a guide to help you to begin to build your portfolio.

Conservative Investor = Low risk appetite, more value and income stocks

Moderate Investor = Medium risk appetite, each category of stock given the same weight

Aggressive Investor = High risk appetite, more growth with value stocks added in

At the end of the day, it comes down to what you are most comfortable with and making changes as you see fit.

Today’s Investing Activity:  Today’s activity focuses on understanding the amount of your money that should be directed to stocks and how much to spread across the different sectors of the market.  By having an asset allocation strategy, you can invest with confidence, reduce risk, increase your returns, and work to eliminate emotional investing that can cause you to overreact to market fluctuations.

Build your portfolio by identifying 3-5 stocks in each of the sectors you indicated from Day 17’s activity.  Be sure to add your stocks to your watch list, as potential investments you will buy, if you haven’t already added them to your portfolio.  If you need assistance with finding stock investments in sectors that interest you, feel free to use the

Fidelity Sectors & Industry Research Resource Center

You can use the “2024 Toolkit – Portfolio Worksheet“ to complete today’s activity.

STEP ONE:

Construct your stock investment portfolio
Select 3-5 stocks for each sector you’ve selected

STEP TWO:

Add your stocks to your watch list

STEP THREE:

Feel free to share a screenshot of your worksheet in The Stocks & Stilettos Society or in the comments below

Tomorrow: Day 19 – Closing The Trade

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Happy Investing!

Cassandra