How To Build Your Own Customised Portfolio

Recently, one of our readers asked us “What are the rules to construct a sensible portfolio as a retail investor?”

It’s a great question. Many retail investors typically start their investing journey purchasing individual stocks, and tend not neglect thinking about constructing a winning portfolio.

It is important to build a portfolio suited to your unique investment profile. No one person will have the same risk tolerance or investment goals, which in turn, means a different portfolio for each individual out there.

In general, there are some questions/rules you can ask yourself for designing your customized portfolio:

Question Guidelines
What is your expected return per year? A higher return will constitute to taking on higher risks.

E.g. You will need to allocate higher percentage of your portfolio to growth stocks to achieve a return of 20% per year.

What is your risk appetite? You can measure it by asking yourself on how much capital are you willing to lose (10% or 25%) before you lose your sleep.

The risk-averse investor may only invest in blue chips for an example.

Do you have a natural advantage in a specific industry? Some employees invest in their own companies as they are positive on the prospects ahead.

Alternatively, you can invest in the industry that you work in and are familiar with.

How familiar and knowledgeable are you with the stock market? Are you willing to learn terms such as Return-on-Equity or Asset Turnover?

Are you willing to spend time poring over the companies’ reports?

It is important to have an understanding of the companies that you choose to invest in.

What is your Investment Strategy? There are many investment strategies to choose from which ranges from income investing to value investing to growth investing. It may even be a combination of some.


After you complete the construction of the portfolio, it pays to continue to stay disciplined and periodically review your portfolio.

Stay disciplined

More often than not, people make the huge mistake of blindly following the hot stock recommendations of stock brokers without doing any research. This is dangerous as the expert you listen to may have a totally different risk profile or investment holding period from you.

On a positive note, asset allocation can assist you in staying the course when you are faced with any dilemma on whether to invest in the next hot stock. Knowing your risk appetite at the back of your mind will determine whether you can stomach the risks when it comes to your next investment.

Constant Review of Your Portfolio

After you are done constructing your portfolio with your desired asset allocation, it is important to conduct periodic portfolio reviews (the norm is on an annual basis). The value of the various assets in your portfolio will vary over with time, affecting the weightage of each asset class within it.

An example is when your portfolio consists of 60% in blue chips and 40% in small/mid cap growth stocks. Assuming that the value of your growth stocks have increased significantly to  perhaps ~60% weightage, you should rebalance your portfolio to its original state.

Rebalancing is the process of selling the allocation of your portfolio which have increased significantly, and in turn, purchasing the other asset class – blue chips in this case. This process is also important if your investment strategy or tolerance for risk has changed over the years.

Foolish Bottom-line

Many people read about how the investment experts like Warren Buffett become wealthy through the adage of value investing. What they did not realise is that everyone has their own manner of investing and finding your own style of investing is much more effective than following what others are doing.

I wish you all the best as you find your own path to investment success.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.