12-POINT PLAN FOR BUILDING A DIRECT SHARE PORTFOLIO

1. A reasonable allocation of shares is 5%–10% of your capital in any one share for a $10,000 to $25,000 portfolio, and as the amount invested grows I suggest lowering the allocation per share to between 3%–5%. The larger the portfolio the more you may want to consider a bond ETF.

2. Increased exposure to REITs that are exposed to the optimal sectors of the property market for growth and income.

3. The more you increase the weighting to a share, the more risk you’re taking on (the more money you can make and the more money you can lose).

4. Avoid creating a portfolio with 40-plus shares – it’s just too many.

5. Remember to do the weeding and cull the losers or the saggers. The money can be better invested in a share that is going up.

6. Take some profits along the way but keep your quality core holdings; the dividend champions will repay your original capital many times over.

7. Remember that you’re not performing against an index although you will need to reassess your portfolio if you’re not achieving the longterm returns of the market.

8. Be clear about what you’re aiming to achieve; most of us will need growth and income as we’re living longer in a low-interest-rate world.

9. Reinvest the dividend income if you can; it grows your wealth more effectively and allows the power of compounding.

10. Don’t trade too much or allocate only an amount to trading.

11. Watch and monitor the costs.

12. Make a commitment to stay informed and open minded, and never say never.