PORTFOLIO

 

Portfolio

It is rare to find investors investing their entire savings in a single security. Instead, they tend to invest in a group of securities. Such a group of securities is called a portfolio. The objective of creating portfolio which means, savings in gold, In blue chip shares, in high interest yielding securities etc. is to reduce the risk without sacrificing returns. Investors who are knowledgeable about portfolio have a better chance of attractive returns. 

Many investors feel that parking in one security or in one asset class maybe detrimental to the very purpose of wealth creation. No investors prefer to have a portfolio for investment. if one asset or stock perform badly, the other one may be doing well and make up the loss. it is quite common and rational to invest in different sectors industries companies and the like.   

 Portfolios - Different Types 

Investors differ as portfolios also differ. The various concepts of portfolio are

  1. Aggressive portfolio : Investors who aim at the Super return, have a high risk tolerance and are prepared to wait for a long period, Adopt this investment strategy. Investor is prepared to invest a big portion of savings in equity, which is highly risky. Nominal portion of savings will be earmarked for fixed income securities. Perhaps, He may go for penny stocks also. Along with the big risks find a place in this portfolio. 
  2. Defensive portfolio : The investment is strategy calls for investing in defensive stocks or sectorsfor example, invest in pharmaceuticals, crop care companies. At anytime, these defensive stocks or sectors will not get a Big Bear hammering beyond a level. Those who adopt this investment strategy who adopt this investment strategy believe that the definition of a great company is one that will remain grate for many many years to come.   
  3. Patient portfolio : At stock market, money is moved from active to patient investors. This investment is strategy suggests investing in well known companies, which give regular dividends and frequent bonus issues. Blue chip companies or index companies are included in this portfolio style.    
  4. Conservative portfolio : Here priority is given for safety, liquidity or marketability. At risk others investors like pensioners, senior citizens, videos, etc., prefer to follow this investment style. Certain companies are there, their dividend yield is almost near to bank fixed deposit rate. Hedging inflation is the main motto of this investment strategy. Investor will not be greedy at all. 
  5. Efficient portfolio : The idea under this tale is to have highest returns at a given level of risk. a little homework is done to identify good growth stocks. There is a saying, list search before you invest and not after. a close look at the price earnings, book value, etc., is done to select an efficient portfolio. 
  6. Ideal portfolio or moderately reasonable portfolio : An investor who is only 30 years old, can invest 70 percentage of his savings in equity and 30 percentage in fixed income bearing instruments or debentures. A youngster has a reasonably long period to make up the loss, if there is a mishap. own not the most , But the best is the mantra under ideal portfolios. 50 to 55 percentage of savings in equity shares, 25 to 30 percentage in bonds or debentures go for yield and the balance in easily convertible into cash assets will be a good bet for a rational investor. He is sitting on an ideal portfolio. 

Portfolio creation will not guarantee success to an investor. According to Warren Buffett, the great investor the world has seen, diversification will preserve your money and concentration will multiply your money. The old saying don’t put all your eggs in one basket is getting outdated. No many believe that put all your eggs in one basket and take care of it. Anyway it is substantiated that portfolio creation is good in the sense that it will reduce the risk of big financial losses.

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