Investment is the best way to build wealth and attain financial stability for the long term. A good investment is more than just buying or selling assets. The market is highly volatile with risks and diverse investor needs, which require portfolio management. It helps in managing risks, diversifying assets, and maximizing returns to gain maximum possible profit.
Here, we will learn details about Portfolio management and its importance for investors.
Types of Portfolio Management
Portfolio management is of 2 types. Let’s have a look:
Discretionary Portfolio Management Service
The Portfolio manager will understand your goals and manage your portfolio accordingly. The manager makes important decisions related to investment instruments and timings. The arrangements are formalised using a PMS agreement and a power of Attorney. If you prefer professional handling of your portfolio, this option is best for you.
Non- Non-Discretionary Portfolio Management Service
The manager is only involved in advising you on the best for your investments, but the final decision will be made by you. The manager will take action only after your instructions. It is best for the investors who want to participate in their portfolio design while seeking expert advice. It offers balanced professional support and investor control.
Why is Portfolio Management important for Investors?
Portfolio management is essential for investors to achieve financial goals. It minimizes risk and offers a structured approach toward investing. Here are the importance of portfolio management for investors:
Customized Investment Solutions
Every investor has different financial goals, such as a child’s marriage, buying a car or house, etc. Portfolio management allows you to design personalized strategies as per your unique goals, income, risk tolerance, and time. It ensures your investment is relevant and profitable.
Balancing the risk and return
A good balance of high-risk and low-risk assets makes a perfect portfolio. Equities with high returns are usually volatile, while fixed-income assets offer stability but slow growth. Your portfolio must have a correct mix of equities, debt, cash, etc, to ensure market fluctuations don’t affect you much. You can get more information on balancing the portfolio effectively on indipost.in.
Professional Expertise
Not all investors are experts and skilled in managing portfolios. In such a situation, managers help in managing a portfolio with research-based insights and extensive experience. It ensures your investment is secure and provides you with good returns.
Continuous Monitoring and Review
Markets are ever-changing, and the need for portfolio management cannot be denied. Portfolio management involves regular monitoring and necessary adjustments while keeping the investment aligned with your goals.
Diversification Benefits
Portfolio management reduces the risk by spreading the investment across various sectors, locations, and asset classes. With proper diversification, your low-performing assets will not impact your overall portfolio.
Transparency and Accountability
Modern portfolio management services provide a clear reporting and fee structure. It allows investors to track their performance and make decisions confidently.
Conclusion
Portfolio management offers disciplines, structures, and a goal-oriented approach for investment. It helps investors to balance risk and return with customisation, expertise, diversification, and regular monitoring.
