Portfolio Objectives
There are four different portfolio objectives that can fit a client’s goals. Before the client can find out what their portfolio objective is, they will need to ask themselves a few very important questions. First, what is the goal of this portfolio? Is the client’s goal to prepare for retirement, living in retirement, saving for education, etc. Another important consideration that should be addressed is what is the investment time horizon of this portfolio? Is the client investing for a short-term goal, long term goal, and how many years? Lastly, the client will need to know what their risk tolerance is. How much risk are they willing to take when it comes to their investments?
The first type of portfolio objective is Stability of Principal. This type of investor has a risk tolerance that is very conservative. These types of investors are typically in their about to retire, or are in their retirement years already. The goal behind the stability of principal objective is to invest in investments that will not lose the amount the client has put in. This is the most conservative portfolio available and has very small growth due to the conservative approach of the portfolio. This portfolio will typically not keep up with inflation due to the fact that this portfolio does not invest in securities tied to the market that will promote growth. The types of investments that the client will see in this portfolio will be short term and long term CDs, short term and long term bonds, and other fixed income securities.
The second type of portfolio objective is an Income portfolio. The type of investor that would be fit for this type of portfolio objective will have a risk tolerance of conservative to moderately conservativ...
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...tor will see investments inside this portfolio such as stocks, mutual funds, an equities unit investment trust (UIT). The types of equities will be stocks that are focused towards growth and that may not pay a dividend, such as Google.
Overall, of the four portfolio objectives, stability of principal, income, growth of income, and capital appreciation, there is one more consideration that must be taken in to place. That consideration is taxes. With the portfolios of growth of income and capital appreciation, you will not have to pay taxes on the appreciation, only then income that may be generated inside such as the dividends paid. Whereas with stability of principal and income, there will typically be higher taxes paid because more income will be generated. Of course, if these portfolios are in a tax sheltered vehicle, taxes can be deferred or even grow tax free.
Clorox Company (Clorox) is a company with publicly-traded shares and it has operations in four different sectors; Household, Cleaning, International and Lifestyle. Clorox’s main products include Healthlink, Clorox Healthcare, Green Works and Pine-Sol products among others. In this research paper, a strategic assessment and organizational analysis of Clorox Company is carried out. The organizational analysis covers financial position, industry and competitors, organization situation and strategic recommendations from a managerial perspective.
...r investments that can support the other weight and balance their portfolio and therefore alleviate some of the risk they face.
Over the previous five years, the return of the ProIndex fund have outperformed the S&P 500 index, as the 5-year-return is nearly 3 times than the benchmark and the annualised return is nearly 2 times than the benchmark. It means ProIndex fund has a significant increase in value within that period. However, the ProIndex Fund has a higher standard deviation which means it is more risk than the S&P 500 index. Especially for the annualised standard deviation, it is approximately 10% higher than the benchmark. The correlation coefficient between the ProIndex and benchmark is about 0.65 which means both two variables are positive changing consistently, but there are still some other factors which have impacts on the relationship between two variables as the correlation is less than 1. Furthermore, the higher beta, 1.0132, which is more than 1 and it may be one of the reasons for high risk as well since it is more sensitive to the market change. It means that the ProIndex fund would increase by 1.0132% if the market increased by 1%.
Ross, S.A., Westerfield, R.W., Jaffe, J. and Jordan, B.D., 2008. Modern Financial Management: International Student Edition. 8th Edition. New York: McGraw-Hill Companies.
William Sharpe, Gordon J. Alexander, Jeffrey W Bailey. Investments. Prentice Hall; 6 edition, October 20, 1998
As an investor with several types of securities, I am looking for long-term stability towards a retirement fund. The combination of several different stocks and mutual funds allows for the safety of the investments. By investing long-term in different accounts, I have the ability to gain more in the long-run with less risk of not lose all my savings on one investment.
As the old adage goes, “action speaks louder than words”, walking it like you talk it is exactly the same apple. Do not make unrealistic quotes and promises to your clients that would lead to over-expectation about what you can really do. Putting your best foot forward is natural and cannot be mistaken to be a form of deception, but pretending to do anything you cannot do is an entirely different matter, not only that it can ruin the project and affects the quality of service or product, but client frustrations can kill your reputation over time. 3. Look at the bigger picture When you are working for a client with a specific project, try to find your project’s contribution for him in a bigger picture.
This one’s a bit trickier, I know. It requires you to think about how risk averse you are (i.e., how much would you freak out if you lost a little, some, or a boatload of your investment portfolio) and to consider the types of investments that are likely to help you get to the investment return you’re comfortable with.
Understanding client needs: In order to give solutions to client’s problems it is very important to first understand client needs and their underlying interest.
Asset allocation decisions made by an investor are considered more important than other decisions such as market timing or security selection. In the research provided by Hensel (1991), performance attribution is one of the main components when choosing the right assets in a portfolio. The impact of any investment decision can be measured by comparing its outcome with the outcome of some alternative decision. Furthermore, according to Hensel (1991), every investor has to incorporate the minimum-risk portfolio, which is a combination of securities or asset classes that reduces the uncertainty of future portfolio returns to a minimum.
I enjoy working with amazing clients like you, with similar worries and concerns. My mission is to guide you to achieve remarkable success, be more productive, get more clients and make more
In the two weeks before trading, I watched several stocks on Yahoo Finance, gaining information from colleagues, and researching the Internet for possible options. I started by typing in random tickers into Yahoo’s search bar. Then, I would look at the fifty-two week range. If the current price was closer to the lowest price in the past year, I would look at the five year chart to see how each stock fared. Once I saw there was a decent profit margin, I made note of the stock to purchase on MarketWatch Virtual Stock Exchange when it opened on January 28th. In addition, some of my fellow classmates advised me on stocks, in which, they received a great return from. Since I learned never to trust web sites and people when it came to the stock market, I know I should double check by looking at charts, financial statements, and past history before making a decision on whether or not to purchase a corporation’s stock. Moreover, search engines such as Google aided in the search for stocks. I looked up the best stocks to buy, and what stocks are increasing in price. Although this tactic was not very helpful, I did gain some valuable information from penny stocks. Even though the minimum stock price on MarketWatch is two dollars, I found a couple that were over the entry amount. Overall, I believe I was well prepared to enter this investment game with complete confidence.
My investment style has been shaped mainly investing for two different purposes: investment of personal savings and as a voluntary member of the Board of Directors for a $15M pension fund in one of the companies I used to work. For personal purposes, my investments were allocated in the following asset classes: real state (owned house and commercial rent fund), mutual funds (mainly invested in low risk funds and managed by a Pension fund firm, such as Old Mutual) and equity investments that I managed myself.
Financial Stability. According to Goodhart (2006), financial stability has proved difficult to comprehend, mainly because there is no one accepted definition of what financial stability means. However, a vast national study by the United Way Worldwide identified two critical components that must exist in order for families to attain financial stability: stable adequate income and stable adequate financial resources (Valley of the Sun United Way, n.d.). Moreover, a report from the Corporation for a Skilled Workforce and United Way Worldwide (2011) stated that financial stability is achieved when families obtain sufficient resources via jobs that render enough income to sustain their daily necessities. Consequently, the main goal of financial stability is to increase the
This theory impacts global and domestic financial managers by basing their portfolio using capital market line, capital asset pricing, and securities as a foundation for investments. When used, the MPT establishes investment portfolios, which are used by companies such as Fidelity or Scott Trade for both long-term and short-term strategies.