Rewrite this article: What is a financial portfolio and how to create the best for you? Never consider an ideal financial portfolio containing only your investments. Generally people used to say that my portfolio had few blue chip stocks, few mutual funds and few ETFs or they could also invest in gold. You never think that way about your wallet, if you look that way you will miss the big picture and that is a mistake. You should look at your portfolio as a whole because you are monitoring your financial health, whenever you need to adjust your portfolio you should focus on your overall financial health and condition at that time. Because the adjustment of an Ideal financial portfolio depends mainly on your ability to take risks and your objectives. You should consider that your wallet contains these components: Your fixed income is stable cash flow Your expenses Your investment Your assets Your liability or debts Your liquid cash Given all of this, if your portfolio is generating positive income which is positive cash flow over a period of time and your net worth is greater than your liabilities at that time, only consider that you are building an ideal financial portfolio. solid. If your portfolio is missing any of the above components or you do not know the fixed number of components, you may need to adjust your portfolio accordingly. Hopefully this will give you some insight into how to think about what an ideal financial portfolio is. You always ensure that your liabilities never exceed your assets and that your portfolio generates positive cash flow. You still need to maintain them, if you find that your liabilities are greater than your assets at any given time, you are in a high-risk area, or you need to determine that your fixed income needs to increase enough to cover that risk. . How to understand it is a complex question, we will talk about it another day. What is an investment portfolio? We will now discuss an example of an investment portfolio. From the discussion above and also if you apply the formula to yourself to test it, then you have a fair idea of ​​what kind of investor you are with regards to risk tolerance. In short, an investment portfolio contains the funds or financial assets in which you have chosen to invest. Depending on investors’ risk tolerance and investment time horizons, and your current income, the investment portfolio can be categorized into three different categories: aggressive, moderate, and conservative portfolio. At this point, I want to remind you of one thing before we assess your overall ideal financial portfolio. If you jump in and focus on the investment portfolio, you will miss the main goal of creating the investment portfolio and you will miss the investment goal due to not deciding your goal well. I already explain the risk associated with each type of mutual fund in the Mutual fund type and their characteristics section. Now you need to do some research and choose a fund that’s right for you. Next, we will do a comparative discussion of each type of portfolio for your better understanding of the mutual fund field. Remember I took mutual funds as an example to show you how to dig into your investment portfolio, you need to focus on the process, not the mutual fund investment. Investment portfolio for dynamic investors An aggressive portfolio suits an investor who has a higher risk tolerance and longer time horizon. The investor should invest for at least seven to ten years before their invested sum is repaid and also be prepared to accept periods of extreme market volatility, thus ups and downs in the money invested. The aggressive portfolio investor allows this volatility for the possibility of receiving a higher relative return that beats inflation by a wide margin. The reason aggressive portfolio investors need to invest for the long term is to have a high fund allocation to equities and riskier investments. In the event of a sharp drop in the market, you will need a long time to compensate for the drop in value. Simply the longer the equity allocation, the more appropriate the investment period. Here is an example of a portfolio breakdown by mutual fund type for an aggressive investor. 35% Large Cap Fund Mid Cap Fund 25% Small cap funds 25% 15% Bond Fund Aggressive portfolios are most suitable for investors in their twenties or thirties, as they usually have decades to invest and recoup any losses they may incur, and the return is also quite high. Investment portfolio for moderate investors A moderate portfolio is suitable for an investor with an average risk tolerance and investment time horizon. The investor must invest for at least more than five years before the sum invested is returned to him. Here is an example of a portfolio breakdown by mutual fund type for a conservative investor 40% Large Cap Fund 30% Hybrid Funds Small cap funds 10% 25% Bond Fund Most investors tend to fall into the moderate category, meaning they want good returns but are not comfortable taking on high levels of market risk. Its best annual gain could be 20-30%, and its biggest decline in a year could be 20-25%. Investment Portfolio Conservative Investors A conservative portfolio is suitable for an investor who has a low tolerance for risk and an investment time horizon ranging from immediate to more than three years. Conservative investors are unwilling to accept periods of extreme market volatility and seek returns slightly above inflation. Here is an example of a portfolio breakdown by mutual fund type for a conservative investor. Large Cap Fund 15% (Index) Hybrid fund 10% Small cap funds 5% 45% Bond Fund 35% cash/money market The highest gain this portfolio could have in a calendar year could be 15%, and the worst drop could be 5-8%. Keep in mind that all investors are different. Even if you fall into one of these three broad categories, your financial situation may differ from that of others. One last tip, before investing in mutual funds, please check the fund’s portfolio and asset allocation (you can check it on the Moneycontrol website). If you choose two funds from almost the same portfolio, your investment risks increase as well as your profit also increases when both funds perform well, but you will suffer double loss at the time when the funds do not perform well. Portfolio management principles You should read and understand all of the information I have provided above before selecting the best fund for your investment portfolio. The general motive for creating an investment portfolio or you could say the first priority of successful portfolio management is to ensure the safety of your investment. Your money invested is in the best asset class to get the best return at the same time with minimum risk, keep track of your purpose for which you invested, to help you choose the best investment option based your age, income, time horizon and ability to take risks. In a nutshell, the steps are: Plan your investment based on your goal, risk appetite, and investment horizon (I’ve already discussed planning your investment in detail here.) Asset allocation: Choose the right type of asset or financial instrument ( You now know the different types of mutual funds available on the market, their characteristics and their risk profile. You also have information on the most suitable investment horizon for this type of fund. Depending on your needs, choose the best one for you.) Diversification: Create the best investment portfolio that meets your financial goal (now I’m absolutely convinced that you can create your own investment portfolio that meets your financial goal. Detailed information is provided in the portfolio section of this link.) Rebalancing, Tax Efficiency: For more information and discussion on asset allocation, rebalancing and tax efficiency, please see the Investment Planning section. After deciding on all the parameters, you can go to the Moneycontol website to get details of the available funds. For your information, I attach the screenshot. In the filter area, you can modify the filter criteria according to your needs, such as fund house, fund category, fund ranking, etc. I hope this will help you.


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