How to invest : How to invest Portfolio management
What is a Portfolio ? : What is a Portfolio ? First of all let me tell you portfolio is not a scientific word. Portfolio is just a pool of investments you own. It can be stock, mutual funds, bond and other investments you own. Don’t relate portfolio to large investors, if you have only single share of wall mart that is actually your portfolio.
What is management ? : What is management ? The term ‘management’ encompasses an array of different functions undertaken to accomplish a task successfully. In the simplest of terms, management is all about ‘getting things done’.
What is a Portfolio management ? : What is a Portfolio management ? The art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against. performance.
Objectives : Objectives Diversification.
Acknowledgement of the risk.
Maximizing the returns by using judicious knowledge.
Diversification : Diversification Diversification is the process of investing a portfolio across different asset classes in varying proportions depending on an investor’s time horizon, risk tolerance, and goals.
Diversification by Sector and Industry : Diversification by Sector and Industry Means invest in different sector available out there. Sector like energy, finance, health care, fmcg, information technology, telecommunication and so on. Pick the best 1 or 2 company in each sector for your portfolio.
Always look for better fundamentals.
Diversification of Risk : Diversification of Risk How should we diversify our risks? We already diversify our portfolio into different sector available there.
Diversification of risk only mean that invest through all level of the companies. A balanced portfolio owns small, medium and large caps company.
Investing with a smart mind : Investing with a smart mind A good investor always invest with a smart mind. When choosing stocks for portfolio you must have a plan. You should do all fundamental research and technical check when to enter into a stock. Always pre-determine your selling point, it could be through volume patterns or price targets.
Stop losses and maximize gains : Stop losses and maximize gains Following a good portfolio you also must set up a stop loss point. Not having stop loss is the big mistake when building a good portfolio cause our main aim is “stop losses and maximize gains. Always follow stock in terms of moving averages.
Try to be cost effective always : Try to be cost effective always That is not a very much important part but you should always look to be cost effective. Your account commission can cost you 4 to 5 % of the portfolio. Investors should keep trading to a minimum and use low-cost online trading accounts in order to reduce trading expense.
Re-Investing : Re-Investing When you hold stocks you will receive some dividends also. So always re-invest those dividends amount into share market it will help you to cover up the cost as well.
Conclusion : Conclusion To build a good portfolio try to diversify your money and risk into different sectors. Try to minimize your cost with effective accounts.
Be smart and do fundamental research of stock and technical check for when to enter and when to leave.
Always keep in mind your aim is maximizing gains not tension.