Wealth Building Pyramid Portfolios Can Work For All Investors Including You
Investors prosper with wealth building pyramid portfolios. Pyramid portfolio strategy is one of the best things a new investor can learn. Investors can build financial security and retirement independence using the pyramid inspired portfolio approach. Any investor from the newest beginner to the most knowledgeable, advanced and experienced, can learn and use the pyramid portfolio strategy.
No job or employment can possibly pay you as well, over a lifetime, as investing can. You will gain more from the hours used to learn and manage your own investments than from any other activity in your lifetime.
The first stages of pyramid portfolio building can help beginners learn investing basics. You can develop your portfolio as you grow in knowledge, understanding and investing skill. This can let new investors set up the base of their future wealth, while they develop the knowledge and experience needed to build financial security.
All investors can use the pyramid portfolio strategy for a lifetime of wealth building and superior investment performance. Long time investors, using this approach, improve their performance primarily because they develop greater market awareness. Greater market awareness can help any investor be more successful.
Investors Build Wealth And Prosper With Three Pyramid Portfolio Layers
- Income Portfolio
- Growth Portfolio
- Speculative Portfolio
The three pyramid portfolios layers are distinct and different. Each has a specific role. The pyramid portfolio approach is entirely based on first building a solid income portfolio as the foundation. Above the income base, depending on your circumstances and market conditions, other layers can offer greater performance possibilities.
However, each new layer always makes up proportionally less of the total portfolio. The income portfolio is always the largest; the speculative portfolio is always the smallest.
The income portfolio always forms the base of all other investing activity. You must never try to build either a growth portfolio or speculative portfolio without first having a solid established income portfolio as the base.
We Must Be Aware, “Investing is simple, but not easy.” Warren Buffett
This Warren Buffett quote reminds us that there are many things to know and do to become an investor that does simple investing well. Keeping the first or base layer simple, gives us the opportunity to take a step by step approach to learning the portfolio building process. You can learn more about the pyramid portfolio strategy in the many bite-sized White Top View posts that follow.
Begin Building Your Pyramid Portfolio With A Solid Income Producing Foundation
Investments in well established dividend paying companies are held in the income portfolio to serve as the base or foundation of your investing pyramid. This critical solid base works for any investor wanting to build wealth and security. No shortcuts allowed here. Always build long-term portfolios on an income base.
Choices: Income Investing, Income + Performance or That & More!
Investors using the pyramid portfolio building strategy, can choose to build only the base income layer. That can give them a solid, conservative and reliable financial asset. Providing that they begin in time, the income base layer has the great advantage of needing limited attention. Once investment selections are make, it almost manages itself. But not completely. Paying attention always pays off when investing.
The income investment portfolio, holding shares in large, established, dividend paying companies, dependably grows with the economy. All the while, shareholders are paid to ride. The dependable dividend payments will flow year after year. That offers security, comfort and retirement independence. Note: achieving financial security and retirement independence with this approach, takes many years.
When it comes to retirement independence, start soon enough and you will not have to play catch up. The more years you have to grow your financial base, the greater are your financial possibilities. When time is on your side, more conservative choices can dependably deliver excellent long-term results.
Commit To Yourself
If your investment goals or resources mean you want or need greater investment performance, you must start by making some fundamental personal decisions. You must commit to yourself and hold yourself accountable, for taking the time and making the effort to learn and invest well. You can choose to do it, but it does take time and effort.
Do not go beyond the basic income portfolio if you are not committed to investing the time and effort needed to learn and manage the advanced layers of a pyramid portfolio.
Investors wishing to progress beyond the basic performance level in their portfolio can move to the more advanced approaches. It is important to move along and make progress but also important to learn at your own pace and when circumstances are right for you.
“Risk comes from not knowing what you are doing.” Warren Buffett
Any fool can invest. Doing it well requires knowing what you are doing. Knowing what you are doing, manages the risk, keeping it under control. Knowledge and experience combine to make investing well a possibility open to anyone. Put in the time and make the effort; you can do this once you decide you want to learn.
The growth portfolio or second layer of your investing pyramid requires a good working knowledge of basic investing. Be in no hurry to get there. There is much to learn and the market will be there when you are ready.
Each of the three layers of the pyramid portfolio, in turn, need higher levels of knowledge. They also need progressively more attention to manage and consistently play well. Move to a higher level only after you become knowledgeable and comfortable with your understanding of investing and stock markets at each previous level.
Caution! For Advanced Investors Only!
The third or top layer should only be considered by advanced, superior and sophisticated investors, with a track record. Their own track record! Looking over the shoulder of an excellent financial advisor while they produce good returns with your money is their track record, not yours.
Yes, it is your money and you keep the gains. Just be sure that you are not arm-chair quarterbacking or back seat driving thinking that you know what it is like to invest or trade. The point is, being on the firing line, with real money, making decisions and taking action yourself is a very different situation than watching someone else do it for you.
The speculative portfolio is the most demanding, volatile and challenging to manage well. Before trying to succeed with a speculative portfolio, be certain that you have already shown you can successfully invest, grow capital and trade profitably. You can do all that at the growth portfolio level. Master that before considering building a speculative portfolio.
As Warren Buffett told us earlier, “Investing is simple, but not easy.” I urge you to take the time to learn before you consider risking capital with any aggressive growth or speculative investing moves. Speculative investing is legitimate and pays spectacularly well but is no place for either a beginner or intermediate player. Learn before you try to earn or you will burn!
White Top Pyramid Portfolio Series
This post begins a continuing White Top View series on the Pyramid Portfolio. The series of posts discusses each aspect of the pyramid portfolio approach to wealth building.
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