Young investors tend to jump in with both feet and start stock-picking based on impulses from various media outlets. In order to structure the process, here is a step-by-step plan to slow down the enthusiasm.

1. Identify your investment goals: Before you start building your portfolio, it’s important to have a clear understanding of your investment goals. This will help you determine the right mix of assets to include in your portfolio. What asset classes are your strength and what performance is realistic to expect in a specified time frame?

2. Determine your risk tolerance: Your risk tolerance is an important factor to consider when building your portfolio. This will help you determine the appropriate mix of high-risk and low-risk investments. This is usually the first question you would be asked if you show interest in investing. If you like risk, you might enjoy investing in more volatile equities and limit your diversification.

3. Develop your investment strategy: Once you have identified your investment goals and determined your risk tolerance, you can develop your investment strategy. This will involve deciding on the types of investments you want to include in your portfolio, as well as the allocation of assets within your portfolio. Maybe you have a specific technique or algorithm that you believe could work. This is a time also to do dry runs or paper trading to simulate a prototype portfolio.

4. Research and select investments: After you have developed your investment strategy, you can begin researching and selecting the specific investments to include in your portfolio. This will involve evaluating the potential risks and rewards of different investments and determining which ones align with your investment goals and risk tolerance. You should also decide at which frequency you will update your selection.

5. Monitor and re-balance your portfolio: As the market and your personal circumstances change, it’s important to regularly monitor and rebalance your portfolio to ensure it continues to align with your investment goals and risk tolerance. This may involve making changes to the mix of assets in your portfolio or selling and purchasing new investments. Usually this is done bi-weekly or monthly, unless the portfolio is actively managed on a daily basis.

6. Review and adjust your investment strategy: As you gain experience and your investment goals and circumstances change, it’s important to review and adjust your investment strategy to ensure it remains effective. This may involve making changes to the types of investments you include in your portfolio or the allocation of assets within it. You can also set a performance level that will be a circuit breaker.

You can say that effective portfolio management involves regularly reviewing and adjusting your investment strategy to ensure it continues to align with your investment goals and risk tolerance. By following these steps, you have a framework that can help you maximize the potential returns of your portfolio while minimizing risks.