A portfolio investment scheme comprises of a passive investment of securities in a portfolio. This portfolio is made with the expectation of earning a return, in direct correlation with the portfolio’s expected risks.
Most of the schemes for the portfolio investment in India span a wide range of asset classes which includes, stocks, government bonds, corporate bonds treasury bills and real estate investment trusts. It also includes real estate investment trusts, exchange-traded funds, mutual funds and certificated of deposits.
The investments made in a portfolio depend on the investor’s individual circumstances or certain factors. These factors such be weighed against the investor’s goals and time horizon. In most cases, the factors include the following:
Creating a portfolio investment scheme roadmap: Before making any investment, you need to be aware of your entire financial situation, especially as a first timer. You need to understand your goals and risk tolerance. As there’s no guarantee that you will make money from all your investments, getting the right facts and details about your savings and investing will help you create an intelligent plan backed by the right financial security. In this way, you can enjoy years of benefits of managing your money.
Evaluate your comfort – risk zone: All investments, including the portfolio investment in India, involves some degree of risk. In the event you need to invest in a portfolio, it is important that you understand all the influential factors before you lose some or all of your funds. Not all investments schemes are protected by insurance. In certain investments, you could lose your principal. However, the reward for taking on risks offers a great potential for higher investment returns. If you have a financial goal with a long time tenure, you will have a chance to make more funds by investing in asset categories with fewer risks, as compared to investing in assets with fewer risks. Alternatively, you can also invest in cash investments that are appropriate for short term financial goals. However, there is a concern that investing in these cash equivalents will also include inflation risks, which can outpace and erode returns over time.
Consider the mix of investments: A portfolio scheme comprises of different investment categories, whose returns variate under difference market conditions. With this different conditioning within a portfolio, you can get the ideal protection against significant losses. In reality, the returns of three major asset categories such as stocks, bonds and cash have not fluctuated at the same time. That is because, market conditions will cause on asset category to do well, causing the other asset category’s returns to be reduced. By investing in more than one category of asset, you will help balance the investment risk and ensure an overall investment return. In this way, asset allocation, is important, as it will go a long way to meet your financial goal.