Let's discuss Portfolio Management!

Bonjour everyone!

You all might be well aware of the event that is being organised on 28th of December in collaboration with Wright Research, today we take a look at what portfolio management is and some techniques.

Just like Finance is the art and science of managing money. Portfolio Management is the art and science of selecting and overseeing a group of investments that meet long-term financial objectives.

According to Investopedia, there are 4 practices for Effective Portfolio Management:

1. Determining Asset Allocation:

Understand the risk that you want to take and the potential to invest. How much capital is allotted for your personal needs, are you ready to risk the capital and have the stress associated with it for a short term drop?

2. Achieving the Portfolio

Your portfolio may just not only be a stock there are several assets to choose from: Stocks, Bonds, Mutual Funds, Exchange-Traded Funds

Stocks: Consider factors like sector, market cap and stock type. Choose your picks and make sure to carry out an in-depth analysis, stay updated!

Bonds: Several factors to consider including the coupon, maturity, bond type, credit rating and interest-rate environment.

Mutual Funds: Fund managers picks that are well researched and consists of stocks and bonds. They come with some charges that will lower down your returns though index funds can be a substitute.

Exchange-Traded Funds - ETFs are essentially mutual funds that trade like stocks. They’re similar to mutual funds in that they represent a large basket of stocks, usually grouped by sector, capitalisation. country etc. ETFs are passively managed.

3. Reassessing Portfolio Management

Keep on analysing and rebalancing your portfolio periodically because prices are bound to change and your initial weightings may change. Also over time current financial situation, needs and risk tolerance will change.

4. Rebalancing Strategically

Once you have determined which securities you need to reduce and by how much, decide which underweighted securities you will buy with the proceeds from selling the overweighted securities. To choose your securities, use the approaches discussed in Step 2.

That’s all folks! For more insights and doubts hope onto the call on 28 December!

In case you all haven’t registered here’s the link: Vested x Wright - Investing In Volatile Markets - Zoom (lu.ma)

Here a few tips I read in a blog to summarise here are a few pointers to keep in mind while managing your portfolio:

Know Yourself - Understand your return objectives, risk tolerance and constraints like taxes.

Invest slowly - Experience will make you wiser.
Pro Tip: Follow a company quarter by quarter

Read - Take time to read - Read about the company you’re about to invest in. Look at the numbers, look up everything then decide.

Understand Diversification - Don’t diversify just for the sake of it.

Remember, The Ideal Number of Stocks = The number of companies you understand thoroughly and keep track of.

Here’s something you should know, Peter Lynch owned 1500 stocks, he had the backing of his staff to do the research and decide but still got burned out.

Here’s the numerical recommendation according to some experts:

Peter Lynch: 5
Jim Cramer: 10

For more details hope onto to our event tomorrow:

Vested x Wright - Investing In Volatile Markets - Zoom (lu.ma)