Aspects of a Functioning Investment Portfolio and the Necessity to Review it

February 12, 2016

A healthy investment portfolio achieves your objectives while operating within certain bounds, the most important of them being risk tolerance, investment horizon, and the amount invested.

The composition of the portfolio of individual investor must be determined by taking into account their particular situation not every investor has same goals or is willing to take the same amount of risk.

Striking the balance between Risk and Return

Achieving your investment objectives requires developing a portfolio with the right combination of asset classes. Individual investment vehicles can generate varying rates of return, the overall combination must perform within the range of the investor’s goals. Getting the balance right between risk and return requires the investor to decide, how much variability in the asset return is acceptable to them. A risk averse investor would prefer low-risk, low-return, and highly diversified assets. A riskier investor, contrarily, is willing to endure volatility of assets for high returns, and at times, acquiring assets involving a high-risk of loss.

The Need to Monitor Performance

Keeping the performance of one’s portfolio in line with their investment objectives necessitates a periodic review or analysis of the portfolio. A portfolio review is, in essence, comprehensive monitoring of the performance of individual assets, analyzing their cumulative effect, and making the changes necessary to optimize the combination of the investment vehicles.The majority of the investors don’t bother to review their portfolios on a regular basis, which may explain their reason for less than optimal performance. Re-balancing is critical and should be reviewed 1-2 timers per year, especially at year end for tax loss selling purposes. Many times, investors reviewing their portfolio don’t know the critical parameters with which to measure their assets performance; they are not aware of the resources to compare their portfolios returns with. To put it briefly, they neither have the tools nor the expertise to perform a comprehensive and meaningful portfolio analysis.

Ensuring a Sound Portfolio Analysis

A comprehensive portfolio review demands a deep insight of the market, relevant experience, and of course, enough time. Working with an investment adviser can be helpful in such situations. They have the market know-how, tools to perform a meaningful portfolio review and the experience to resolve any unforeseen intricacies. At Zehnder Wealth Management, you will work with dependable, experienced, and qualified investment advisers. We realize the distinctive context of each client and treat our client’s needs by keeping that in view. With our advice and assistance, investors get to make well-informed decisions that are suitable for their individual needs. Whether you want to tune up your portfolio or develop a new one, Zehnder Wealth Management caters to your needs with our professional investment services.

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