3 Keys To Creating A Winning Investment Portfolio

When building your investment portfolio, you can choose from many different methods.

One is to chase the latest hot stocks. In this method, you search frantically for "hot tips," whether from an investment analyst on CNBC or your coworker, who's "been in stocks for years" and "really knows what he is doing."

Unfortunately, if through this method you chose British Petroleum back in 2010, here's how your results would have looked.

I am going to suggest that there is a better way.

A key word I used in the title is portfolio. What is involved in building a portfolio whose results might look more like this?

I recently wrote a series of three articles for Seeking Alpha. In that series, I argued that the 3 keys to building a winning portfolio are:

1. Low expenses
2. Diversification
3. Dividends

I would suggest starting with the article that discusses low expenses. If you look closely at the picture above, you will note that it visually depicts the effect of fees on the performance of your portfolio. From there, move to the article on diversification. In this article, I discuss how diversifying your investments reduces risk and volatility, often while still generating higher returns. It is at this point that the final article in the series, on dividends, will make the most sense. It talks about "feeding" your portfolio with a steady stream of income, and how it can best be put to use.

I hope this brief overview encourages you to look more closely at these 3 keys, and how they can help you build a winning investment portfolio.

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