The First Step in Investment Portfolio Management Discussed

SAN JOSE, Calif. - May 29, 2014 - PRLog -- An article from Remonsy ETF Network discusses the essential first step to portfolio management.

The first step in portfolio management, according to Remonsy ETF Network, is to develop a scientific asset allocation model. This process is different depending on what the overall goal of the portfolio is to an investor.

After determining what the investor wants to achieve with the portfolio, it’s important to select investments that work together in helping to achieve the portfolio goal. Ultimately, asset allocation is a mathematical process of finding what investments to purchase and how much of these investments should be purchased.

Before any asset allocation can take part, it’s necessary to find the level of risk that can be assumed. As the article ( points out, there are two competing types of risks in the life of an investor. These risks are personal risk tolerance and the risk required to accomplish the portfolio goals.

Determining personal risk tolerance has been done a variety of ways throughout the years. Many investment firms suggest using hypothetical situations based on survey questions. However, Remonsy ETF Network disagrees with this approach because it isn’t very accurate. Instead, the article suggests looking at real investment portfolios to get a clearer picture of what’s happening. Looking at actual investment portfolios over a period of time provides an actual view of the ups and downs in terms of actual dollar amounts.

The article continues to discuss historical return, drawdowns, and recovery time, and uses four graphs to portray value of portfolios. Investors who need another approach to portfolio management, or are just starting to build a portfolio, this information on portfolio management can be found at Remonsy ETF Network:

Remonsy ETF Network provides investors with ETF investing advice through daily articles, free reports, and premium subscription services. Remonsy founder and CEO Tom Vaughan has nearly three decades of investment experience as a financial advisor. Vaughan founded and acted as CEO of Retirement Capital Strategies, an award-winning retirement planning and money management company located in Silicon Valley. Vaughan began using ETFs in client portfolios in 1998.

As an advisor, Vaughan operated with more than $300 million under management, and has created over 6,000 financial plans. His wisdom can be found at Remonsy ETF Network, where he’s the primary author.
Source:Remonsy ETF Network
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Tags:Portfolio Management, Investment Portfolio, Etf, Asset Allocation Model, Scientific Asset Allocation
Industry:Investment, Publishing
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