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Investment Portfolio Project.

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To get started on your portfolio project, you first need to develop an investment plan. Your plan should outline your investment strategy. Be sure to include as part of your plan objectives and strategies (types of assets, limitations, allocations, sources and so on). This policy will be used to guide your portfolio management project.

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Why should you invest?

Simply put, one should invest so that your money grows and shields you against rising inflation. The rate of return on investments should be greater than the rate of inflation, leaving you with a nice surplus over a period of time. Whether your money is invested in stocks, bonds, mutual funds or certificates of deposit (CD), the end result is to create wealth for retirement, marriage, college fees, vacations, better standard of living or to just pass on the money to the next generation. Also, it's exciting to review your investment returns and to see how they are accumulating at a faster rate than your salary.

Factors for the choice of asset allocation

The amount that you invest will eventually depend on factors such as:

Your risk profile

Your Time horizon

Savings made

The investment options before you are many. Pick the right investment tool based on the risk profile, circumstance, time zone available etc. If you feel market volatility is something which you can live with then buy stocks. If you do not want to risk the volatility and simply desire some income, then you should consider fixed income securities. However, remember that risk and returns are directly proportional to each other. Higher the risk, higher the returns.

Begin with an understanding of yourself.

What do you want from your investments?
It could be growth, income or both.

How comfortable are you to take risks?
It's only human if your first reaction on an adverse market movement is to sell and run away. To shield yourself against short term trading risks one has to take a long-term view. Renowned experts such as Benjamin Graham and Warren Buffet rarely shuffle their portfolio unless there is some change in the fundamentals of a company. Once you see the kind of returns you can generate over time, you'll come to realize that it really doesn't matter if your stock drops or rises over the course of a few hours or days or weeks or even months. Mutual funds are a good way to begin investing in the stock market. Funds render investment services with professionalism and give a good diversification over many sectors. If volatility is not your cup of tea, then you might consider buying fixed income securities.

Planning and Setting Goals: Investment requires a lot of planning. Decide on your basic framework of investments and chart your ...

Solution Summary

The solution discusses investment portfolio projects. The objective and strategies of an investment portfolio project are determined.