Which of the following is the first step in developing a personal investment portfolio?

Identifying financial goals and risk tolerance is the foundational first step in developing a personal investment portfolio. This process involves understanding what you aim to achieve through investing—whether it's saving for retirement, buying a home, funding education, or other personal aspirations. Additionally, assessing your risk tolerance helps determine how much risk you are willing and able to take with your investments, which is crucial for making informed decisions.

This initial framework directs subsequent steps, such as choosing appropriate asset classes that align with your goals and risk profile. Without a clear understanding of your goals and tolerance for risk, picking asset classes or diversifying within them might lead to choices that do not serve your best interests. Likewise, monitoring the portfolio is an ongoing responsibility that comes after the initial setup; it doesn't establish the investment strategy itself. Therefore, this first step is critical for ensuring that the entire portfolio reflects your personal financial landscape and objectives.