What is Portfolio?
A portfolio is a grouping of financial assets into different categories such as stock, fixed income instrument etc.
Stock is the ownership certificates of any company. It can be common stock or preferred stock.
Fixed income instrument can be debt instrument issued by a government, corporation or other entity to finance and expand their operations. Fixed-income investments are a secure, low-risk way to generate a steady flow of income.
- Fixed income Instrument:
Who makes a portfolio?
A financial Portfolio can be created by investor or can be managed by financial professionals based on need of the investors.
What are the basic factors that I need to consider while creating my portfolio?
Basic factors that you need to consider while creating portfolio is:-
- Risk tolerance capacity
- Investment objective
- Constraints such as:-
- Time horizon
- Change in regulation
- Liquidity needs
Can I create a portfolio on my own?
Yes, you can. But you have to consider following factors while creating your own portfolio:
- Committed to investment purpose
- Be realistic about your appetite for risk
- Invest with a plan
- Think “quality” over “Quantity”
- Stay focused on what you can control
However managing own portfolio is quite risky. It will take up a lot of time and knowledge to explore the best investment alternatives in the market. Financial professionals (e.g. merchant banks in Nepal) manages the portfolio by applying their expertise knowledge and technology.
What is portfolio management service?
It is the art and science of making decision about assets allocation for individuals and institution, matching investment to objectives and balancing risk against performance.
How Portfolio management service works?
Portfolio management service provider applied different portfolio management strategy to provide consistent return. They segregate total investment into different category such as stock and fixed instrument. They make strategy as per client objective, market and other analysis.
Why Portfolio management service is important for Nepalese Investors?
Today, financial market in Nepal is increasingly complex and managing own portfolio will take up a lot of time and knowledge to explore the best investment alternatives in the market. Nepalese market for investment is motivated by short term profit rather than long term growth. Investment behavior of Nepalese investors is highly influenced by their personal characteristics and psychology. Familiarity effect, lack of fundamental and technical knowledge, market speculation etc. may restrict investor to make rational decision.
How PMS helps to minimize your risk?
Stock market volatility always makes investors feel nervous about the safety of their investment. It is I possible to predict the future, but certain investment strategy can limit your losses and utilizes your investment in best possible ways.
Portfolio management service uses following strategy to minimize risk:
- Diversify investments depending on market condition
- Minimize short term losses when time isn’t on your side
- Use strategy instead of emotional for investment decision.