Basic factor, which you should keep in mind before forming your portfolio and even before doing any investment are age, financial status, future plans and cash needs.

You should try to avoid investing in highly speculative stocks otherwise you might burn your fingers.

You should look at the long-term performance of the company instead of its short-term past appreciation.

You should select a benchmark or standard to measure the performance of your portfolio over time instead of measuring its raw overall performance.

You should follow these steps to form and track your portfolio.

1. Make your policy statement that should explain your short term and long-term cash requirement and your expected returns.

2. Assess your risk tolerance capacity and return requirements

3. Monitor the changing economic and financial condition of the markets.

4. You can track your portfolio more accurately if:

   • You record your cash deposits, withdrawals, and interest payments when they are made or received.

   • Track reinvested funds and cash dividends regularly.

   • You can get a better idea of overall performance if you record your realized and unrealized gains or losses.

   • Take the timing of transactions into account with Internal Rate of Return (IRR) calculations to calculate the actual returns afterwards.