Stocks are volatile, but history tells us that they return more than any other form of investment. To create an unfailing portfolio for shares, you need to have specific goals in mind for the next 3-5 years. When it is decided, the ups and downs of the days and months will not bother you much, because now you are attempting at the long haul. The possibility of inflation outpacing the returns is always there. But that holds good for any type of investment.



The first requisite of an unfailing portfolio is to scout out the best prospectus. To create the varied portfolio! Let it contain both the common stock and preferred stock as per the pre-decided percentage. The preferred stocks give strength to the portfolio as the investor is assured of regular income through dividends, but the action is in common stocks.

2. Identify the growth stocks. They grow fast and will continue to generate capital gains over the long haul. The portfolio must have adequate number of these stocks.

3. Blue-chips are also growth stocks. These are little tolerance to risks stocks. They are safe and reliable and the investor is assured of regular dividend income. The only issue is at what price you buy the share. The entry level calculations of returns may not be encouraging, but they are certainly good for the long-term growth and stability of the portfolio.

4. Think of some cyclical shares as their fortune tends to rise and fall depending upon the state of the economy. They prosper fast and during recession suffer heavily. Some of the shares in this category are steel, chemicals, real-estate and airlines.

5. Defensive shares are the foundation of your portfolio. Such shares, in theory, stand insulated from the effects of the business cycles as they are the essential part of the people's needs and they buy them during good as well as bad times. The shares related to food items and drugs fall in this category.

6. It is a matter of deep consideration whether you must include the speculative shares in the portfolio. These shares carry the natural attraction for the investors. Shares of some young companies, headed by a dynamic Chief Executive may show good results. The technological breakthrough may suddenly stand some new companies in the position of competitive advantage. But this is the area of speculation and the expected killing by the investor may not materialize at all. A very intelligent game plan is required to succeed in this area. Such shares form the volatile portion of your portfolio.

7. The practical aspect of managing your portfolio: The portfolio created by you, at the take off stage, in the given conditions of the market may look perfect. But it can not remain a static entity and you may have to add/delete the shares taking into consideration the mood of the market. This job is too much for an individual to handle. Sorting out thorough thousands of shares, for identifying the good ones, is a difficult job, involving lots of analysis and research. It is necessary for you to engage the services of an experienced broker or a financial consultant. By paying a small fee, you will probably save huge losses. You will also be able to get peace of mind, which is so essential for a regular investor.

The investment approaches cited above to create a portfolio are not mutually exclusive.

Balance is the key in adopting the various investment plans. No single plan is suitable for a good portfolio. Appropriate combination is the answer. Buying and holding, counting on diversity, betting on one industry, swinging the fences for a small part of the portfolio, need to be clubbed together in a healthy proportion to make a success of your investment in the share market.

Building an unfailing portfolio is an ongoing process. It has the beginning, but not the end.