Portfolio management involves the proper selection, combination, and execution of various investment aspects (stocks, commodities, etc.) to reach a particular investment goal and making appropriate adjustments to the investment over time.
A professional trained to manage portfolios is referred to as a portfolio manager, he/she is actively involved in creating strategies for investments which should be in proper alignment with the investor’s financial needs and risk tolerance level. The portfolio manager will initiate a proper assessment for risk factors, discover oversights in the current portfolio, and amend chattels when required.
Portfolio management maybe approached passively or actively, the passive approach involves investing in a fixed long term strategy like the exchange-traded index funds, also known as index investing. While active management involves the active buying and selling of assets or individual stocks in an attempt to exceed the index performance and generate more revenue for the investor
Objectives of Portfolio Management
In portfolio management, there are few points to consider with regard to the personal preference of the investor.
- Investment Growth
- Safety of Principal Amount Invested
- Liquidity
- Marketability of Securities Invested in
- Variation of Risk
- Stable Returns
- Tax Planning