Forming investment portfolio

Forming investment portfolio

by admin

An investment portfolio is a complex of investments in financial constructors for investment strategies, which should ensure the greatest profit with minimal risks.

Getting the optimal result is the main goal of such a project. The investment portfolio consists of several key acts.

Types of investments

  • Material and non-material (degree of finance).
  • Unprofitable, high-yield, medium-profit (investing in projects for environmental and social purposes) without the goal of making a profit.
  • Long-term, short-term, medium-term (by investment term).
  • Low-risk, medium-risk, high-risk (risk level).
  • Direct (when an investor participates in the selection of an object), indirect (objects are selected by specialists, funds and companies).
  • Speculative (buying values: securities, stocks, precious metals, currencies), real (real capital), financial (there is an investment in values: assets, bonds, etc.).
  • Illiquid (implemented as part of property complexes), medium-liquid (1-6 months), highly liquid (quickly converted into cash), low liquid (converted after a half year).

In the process of activity investors often face a difficult choice of investment objects and their different characteristics. They share the view that it is best to invest many different successful objects in the complex, which implies the creation of a portfolio. The latter form various instruments, but their fundamentals are precious metals, stocks, bonds, securities, real estate and currency.

Stages of investment portfolio formation

The process of formation of the investment portfolio can be divided into the following important stages:

  • Clarify the investment policy and the type of portfolio;
  • Development of management strategy;
  • Analysis of assets in the formation of a portfolio. Assets are included in the investment portfolio when they reveal their correlation in profitability, liquidity, and risk.
  • The comparison of the received income with the risk gives an assessment of the effectiveness of the portfolio;
  • Checking the portfolio on the account for the contradictions (for the investor’s purposes) of its contents with changes in the economy and the quality of the securities.

Types of portfolios

Investment portfolios can be of three types in the ratio of risks and possible profit: moderate, aggressive and conservative.

The latter is balanced and often consists of reliable, possibly low-yield assets. Aggressive – highly profitable, but it’s also a high-risk portfolio. Its main part is always the shares. Such assets are managed by investors with a good psychological state, who are not prone to panic in cases of strong fluctuations in finances.

The most “quiet” is a conservative portfolio. The share of risk here is minimal, but it’s also less profitable. Basically, such a package consists of a short-term loan, the presence of bonds and other assets with the least risk in the financial part.

The ultimate goal in creating an investment portfolio is to achieve an optimal level in profitability and risk. To achieve this and learn all the pluses and minuses from these or other financial objects it is worthwhile to take a course in the Trading Group.