The main problem faced by newbie investors is the competent creation of an investment portfolio. What securities do you need to choose in order to have the expected income? How can the risks from investments be balanced? Let's try to understand these and other issues related to the investment portfolio.
It is necessary
Investment plan, risk knowledge, financial advisor
Instructions
Step 1
How can portfolio performance be measured? First of all, it is a reasonable ratio (share, number) of securities, when the expected level of income is equal to the acceptable market risk. There are clear, practical guidelines for creating and managing a portfolio. Here are the most basic ones: To reduce portfolio risk, allocate funds among the investments that have the least correlation. How it might look in practice? The novice investor forms his portfolio, which includes shares in the telecommunications and oil and gas sectors. These sectors in the market have minimal correlation. It is also possible to create your own portfolio of many instruments that have a negative correlation (bonds and stocks).
Step 2
Make sure that the risk for the portfolio as a whole does not equal the risk for each security. For example, if your portfolio consists of 3 shares in different shares, and the price of one of them decreases by 30%, this does not mean a decrease in the value of 30% of the entire portfolio automatically. Recalculate the value of the portfolio, taking into account the shares of securities included in it.
Step 3
Reduce the market risk of the portfolio. To achieve this effectively, you need to diversify it. Although, the more investments of securities you include in it, the lower its yield will be. In fact, every additional financial instrument and an extra share in the total cauldron leads to a diversion of funds.
Step 4
Hire or find a financial advisor. He has been in the market longer than you and knows what ups and downs are expected for certain rates. It is advisable to enlist his advice and build your portfolio. This will help you avoid unnecessary risks. Consider all of the above guidelines and create your financial future.
