Portfolio Approach For Portfolio Management

One of the biggest challenges faced by individuals and institutions is to decide how to invest for future needs. For individuals, the goal might be to fund retirement needs. For such institutions as insurance companies, the goal is to fund future liabilities in the form of insurance claims, whereas endowments seek to provide income to meet the ongoing needs of such institutions as universities. Regardless of the ultimate goal, all face the same set of challenges that extend beyond just the choice of what asset classes to invest in. Some ultimately enter on formulating basic investment in individual securities, evaluating each in isolation, or answering the question, should we take a portfolio approach? Portfolio Approach means evaluating individual

In addition, it is an integrated set of steps undertaken in a consistent manner to create and maintain an appropriate portfolio (combination of assets) to meet clients’ stated goals, (Maginn, et.al, 2008). Furthermore, portfolio management is all about strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and many other tradeoffs encountered in the attempt to maximize return at a given appetite for risk (Portfolio Management and Security Analaysis, 2013). Moreover, Portfolio Management presents the best investment plan to individuals as per their income, budget, age, and ability to undertake

First is the conservative portfolio. When a huge percent of the total portfolio is mostly allotted to lower-risk securities such as fixed-income and money market securities these are called as conservative portfolios. These portfolios aim to guard the principal value of your portfolios. On the other hand, for those who wish to preserve a large portion of the portfolio's total value but are willing to take on a higher amount of risk to get some inflation protection, a moderately conservative portfolio is ideal. Meanwhile, for those who want to divide more or less equally between fixed-income securities and equities in order to provide a balance of growth and income, moderately aggressive model portfolios are applicable. For investors who want to obtain long-term growth of capital, aggressive portfolios are ideal. These portfolios mostly consist of equities, so their value tends to fluctuate widely. Some investors with aggressive portfolios usually add some fixed-income securities in order to provide some diversification. Lastly, for those who aim capital growth over a long time horizon, very aggressive portfolios are favorable. These comprise almost entirely of