Investment portfolio: how to build it (practical tips)

A solid investment portfolio is one of the cornerstones of long-term financial success. Research shows that more than 90% of investment outcomes are determined not by individual picks, but by portfolio structure—how funds are allocated across asset classes. A well-balanced portfolio helps you reach different goals, shield yourself from unexpected market swings and ensure steady capital growth.

Unfortunately, investing without a clear structure often leads to ad-hoc decisions that don’t work well together. A deliberately constructed portfolio balances safety and return: some investments provide stability, others offer growth potential. Below we explore how to build your portfolio the right way.

What is an investment portfolio?

An investment portfolio is a set of financial assets (e.g., shares, bonds, cash, ETFs, etc.) arranged to achieve the best possible return for the investor’s objectives, time horizon and acceptable risk level.

Simply put, a portfolio is a “mix” of different ways to invest. Some can earn more but are volatile and less predictable. Others are usually more stable and safer, but their expected return is lower. Combining several instruments in one portfolio spreads risk—the loss in one area can be offset by gains in another.

How does an investment portfolio work?

First, the investor defines goals and decides how much risk is tolerable. Based on this, suitable instruments are selected. It is important to maintain the portfolio because appropriate investments, goals and risk tolerance change over time. Over the long run, the portfolio lets money grow more steadily because declines in one area are offset by advances in another.

A portfolio can be managed by the owner or by a professional investment manager.

What can an investment portfolio include?

Your portfolio may include different asset types depending on how much risk you want to take and what goals you have. The more diversified the portfolio, the lower the risk that all investments will fall in value at the same time. A portfolio can include:

· Investments in business loans via platforms. This approach is becoming increasingly popular in Lithuania and is also offered by Profitus. In short, investors receive interest on loans provided to project developers. Risk depends on the specific project.

· Direct real estate. Buying residential or commercial property for rental income. Such investments are considered very safe as real estate tends to hold its value over the long term. The main advantage is stable rental income. The downside is the need for a large initial capital outlay.

· Shares (equities). Company shares allow the investor to become a part-owner. There are two main benefits: capital appreciation and dividends. Over the long term, shares tend to deliver the highest returns. However, they are not for everyone as prices can rise and fall quickly, which can be stressful for some investors.

· Investment funds and ETFs. These vehicles let you invest in many shares or bonds at once. The major benefit is diversification that helps keep the portfolio stable.

· Bonds. Debt securities where the investor lends money to a government or a company for a fixed coupon. Bonds are safer than shares but typically yield less. They are often used to provide portfolio stability.

· Deposits and cash. Low-risk options because funds are readily accessible and deposits at banks are usually insured. The drawback is a modest return that can lag inflation. Still, it is advisable to keep part of the portfolio liquid so you can access cash quickly when needed.

· Alternative investments. These may include gold, cryptoassets, works of art, etc. They help diversify a portfolio—especially during economic turbulence—but usually require more knowledge from the investor.

Example portfolio: 25% investments in business loans secured by real estate through platforms, 20% shares, 20% investment funds and ETFs, 15% bonds, 10% cash/deposits, 10% alternative investments.

Tips for building an effective portfolio

An effective portfolio is not a random set of instruments but a well-thought-out system that supports your financial goals. Key principles:

· Diversification. Don’t put all your money in one place. For example, investing only in shares or only in real estate can be risky. It’s best to combine multiple asset classes like those discussed above. This reduces risk and keeps balance.

· Clear goals. Decide why you invest in the first place. Your goals determine the portfolio mix—safer instruments are better for short-term goals, riskier but potentially more profitable assets for long-term goals.

· Risk management. Consider how much volatility you can tolerate. If you dislike large swings, prefer bonds, real estate-backed projects and deposits. If you tolerate risk well, include shares and alternative assets.

· Liquidity. Keep some funds in cash or deposits. This gives flexibility and the ability to react quickly if money is suddenly needed.

· Portfolio maintenance. Review your portfolio regularly. If one investment grows strongly and takes a bigger share than planned, sell part of it and reallocate to bring the portfolio back to its target structure.

· Small but regular contributions. You don’t have to start big—small but consistent contributions can grow into significant capital over time.

· Managing emotions. Investment values change constantly—that’s normal. The main thing is not to let emotions drive money decisions and not to panic over short-term moves.

· Balance between tangible and financial assets. Combine various financial instruments with tangible assets. For example, real estate or real-estate-backed projects can add stability because they typically depend less on day-to-day market swings.

· Source of passive income. An efficient portfolio can grow your capital and generate steady income. Such income can come from share dividends, bond coupons, or rental income from real estate.

· Accounting for inflation. Money loses value over time, so structure the portfolio so that at least part of it can outpace inflation. This can be shares, real estate or other long-term assets that tend to grow with the price level.

· Automation. If it’s hard to invest consistently, automate—for example, transfer a fixed amount monthly to a chosen fund or real-estate-backed lending platform. This helps avoid emotion-driven decisions and supports discipline.

One of the most popular portfolio construction approaches is the 60/40 strategy. It is based on having 60% shares and 40% bonds. Why? In short, although shares are riskier, they tend to deliver higher long-term returns, while bonds provide stability, generate regular coupons and are less volatile. In essence, bonds smooth out overall portfolio ups and downs. The strategy is popular because it is simple and fits many investors who want a balance between growth and safety. Recently it has been applied more broadly—for instance, part of the bond share may be replaced with real-estate projects, ETFs or other instruments to diversify further.

Another common approach is the core–satellite strategy. The idea is that the portfolio should have a stable core and a smaller “satellite” part. The core (about 70–80%) is made up of safer, diversified instruments such as real-estate-backed projects, bonds and ETFs. This serves as the foundation that ensures stability. Satellite investments (about 20–30%) are riskier but potentially more profitable—these can include shares, cryptoassets, etc. The strategy provides flexibility: the core protects against large losses, while satellites help capture higher returns.

Investing on the Profitus platform as part of your portfolio

When building a portfolio, it is useful to include instruments that provide stability and have a clearly defined return mechanism. One option is investing secured by real estate. Such investments add an extra layer of safety because every project has real-estate collateral—if a developer fails to meet obligations, the collateral can be used to repay investors.

· Profitus also offers investing in various business loans secured by real estate. Such investments can become an attractive part of a portfolio because they:

· Help diversify investments;

· Provide the opportunity to earn regular interest;

· Feature clear terms and transparency.

Including real-estate-backed business loans can make the portfolio more stable and balanced, helping investors feel more at ease even when markets fluctuate.

Investing involves the risk of losing part or all of your capital. Before investing, read the Key Information Sheet (KIIS). Remember that past performance does not guarantee future returns.