Investment portfolio is not a complicated thing. If the individual’s financial goals are clear, then it is possible to create a simple and effective portfolio. Portfolio investment shows the total invested assets of the investor. If you are starting investment for the first time, then a term investment portfolio can look scary. However, with a little effort and the right guidance, the whole process can be made easier. With the right guidance from a financial advisor, the whole process of investment can be improved.
What is an investment portfolio?
An investment portfolio is a group of assets that an investor can own. It has stocks, bonds, real estate, gold etc. Investment portfolio classifies investment assets under one roof. For example, an investor can have regular savings in a provident fund in addition to investing in a mutual fund. These accounts need to be seen while taking decisions related to investment.
The best way to manage an investment portfolio well is to hand over its management to a professional financial adviser.
Many people invest carelessly. They do not have clear investment goals. This is wrong. One must look at risk tolerance while developing their portfolio. For many, this is an unknown concept, but professional financial advisors consider it an important factor when making investment decisions. Risk tolerance measures the ability of an investor to deal with volatility. For example, if the person is investing for retirement, then volatility is not right. Markets can bother in the short term, but in the long term profits and losses come to the right level.
Once the risk is identified, the next step is to identify the investment. If a person’s goal is five years away, then one should invest in debt funds, given the stability of returns. Similarly, if a person is young, he can invest in high risk assets such as pure equity funds.
When creating an investment portfolio, it is also important to pay attention to asset allocation. Many investors invest everything in their passion in short-term assets and panic during volatility. It is important to find out how much should be invested in each asset class.
(By Abhinav Angirish, Founder, Investonline.in)