In general is the basket of the income securities, the combination of fixed deposits at banks, investment in equities, bonds, futures&options. The investment portfolio is the combination of stocks invested or willing to be invested. Portfolio makes investor to overlook the entire combination of stocks in one place and thereby take stand to lessen the loss of the portfolio.
It confined of different steps from designing the portfolio to the diversity of the portfolio. The portfolio is decided by the following factors.
Length of investment
It means that investor’s items in the portfolio are short term or long term investment in nature. The investor has to choose the fruits into his baskets according to the age of his and where he invested. The 70 year old cannot select his portfolio of more than 30 years long term investment. In this step, investor chooses the volume and nature of investment, according to the length of investment wish or will.
Conservative and aggressive
There are conservative trader and aggressive traders in the economy. The conservative trader doesn’t want to take the risk, whereas aggressive traders wants to take risks in their financial activities. Conservative traders invest and design their portfolio with less risk weighted assets, whereas aggressive traders invests in the high risk weighted assets.
Economy will not be stagnant, it is fluctuating with the time; hence the markets will be dynamic with time. The portfolio may show a loss or profit in the basket. Hence rebalancing the portfolio wheels in the profit oriented direction is the better move.
Diversification of portfolio
Maintaining or constructing the portfolio with considering the diversification in investment options like equity, mutual fund, fixed deposits and other options. The consideration of sub-classes may help investors to achieve a perfect diversified portfolio.
Author: Editorial staff of 70trades reviews blog