A portfolio is simply that all financial assets in which investment is a person or company. Although at first glance may seem simple, set up an investment portfolio that fits the profile of each investor and the market situation at a particular time is not an easy task. That is why there are professionals who are dedicated exclusively to create and manage these portfolios of financial products.
Sometimes confused the investment portfolio with the number of shares of different companies, but in reality this covers all investments in both fixed income to equities and even developers can enter this section through such goods and root. In fact, it can include everything that has to do with heritage and especially the savings of a person.
1 - Define the investor profile
The first thing that any savings should be done even before considering why and how to invest your savings is the risk you are willing to assume. This is what is known as investment profile and will serve as a starting point and basis for creating any investment portfolio. So much so that this is the first thing any manager often ask your client along with the amount you are willing to invest.
Overall there are three investor profiles: conservative, moderate or aggressive medium. As the very terms indicate the level of risk tolerance is going from smallest to largest. Thus, the first will be willing to take more risks (resulting in losing more money) in exchange for the possibility of higher returns. We must not lose sight that the risk and reward are often directly related to the financial world so that the more risky is a major operation is also the return that can yield.
In principle define the pattern of investment may seem one step easier, but it is not. Basically, the investment profile is simply a reflection of the lifestyle of each person and many times is the market itself or on the progress of the investments that eventually decant the style to one side or another.
For those without clear within that group is, banks and financial institutions have a multitude of tools to help them to clear. In addition, they can always go to an expert to help them resolve this doubt and to define their investment portfolio.
2 - Define the objectives
Once you know the risks that the saver is willing to take it's time to consider their motivations. That is, do I get? The usual response is "get the most out of my savings" or "money purchase / retirement." However, there have to spin a bit finer, especially in the former case. In this sense it is appropriate to define specific performance represented by a percentage of return on the assets invested or at least a range of benefits.
Then performed to determine the term of the investment, ie how long does wish to obtain the goal of profitability?. In general, the term prolonging the greater the investment opportunities and lower risk. On the contrary, obtain a high short-term profitability often involves high risks. Anyway, a good investment portfolio products can combine long and short term.
3 - To diversify and hedge risks
The major premise of any investment portfolio, especially in the long term is to achieve balance. Regardless of the investment profile of each person, a good portfolio should be able to cover the risk of more aggressive assets with more conservative. Diversifying the investment is the best way to achieve it. Just as stock market shares is not advisable to have only one company or a particular sector, nor should we trust all assets of a type of investment or product family. The advantage is that in this case the variety is much greater.
Apart from general investment assets of equities and fixed income, there is a huge diversity of products that are also compatible with each other, both in terms of risk as the investment period. Mutual funds, ETFs, bonds, currency, term deposits, real estate, real estate .... No need to invest in all but count on several different types of products so that if for example it is assumed great risk in the stock market bonds are engaged in search of an insured return for, at least not lose money.
In addition, the wide range of products also allows time to play with the investment and the liquidity available. In a time of uncertainty you can bet on the 'security' and fixed income products that provide liquidity to wait for better opportunities as part of the capital is revalued in long-term tools but not much liquidity.
4 - Taxation and fees
In addition to seeking a balance in investment is also necessary to consider the taxation coupled with each product and the fees charged the different entities on each of them and subsequent transactions that investors make. And is that an investment portfolio is not a static, but must be updated each time, depending primarily on the investment horizon.
In most cases the investor may self-manage their assets without recourse to an expert, but always have to assume some kind of commission for the custody of his actions, maintenance of their funds or simply because of the operations carried out on bag. It is therefore essential to know to choose their financial intermediary. The other major addition to the tariff charges should be the advice you need and the diversity of investment products in feed. And is that some institutions limit their debt tender in their own products, making it more costly in terms of time management.
Nor should we forget Dela taxation. The latest personal income tax reform has served to equate all savings products, which now are taxed at 18%. This does not mean that every tool has its particularities and specific advantages. We must study and take advantage of them when preparing and then managing the investment portfolio.
5 - The shares on the Stock Exchange
Investing in stock is the most profitable long term but also the most dangerous for the whole property, and so deserves special attention. The share devoted exclusively to purchase stock in the form of direct stock sale should not be excessive (5% of the total in the best profiles for moderate). The problem in this regard is that it is the sector most likely to encourage the saver to make mistakes, depart from their investment discipline and end up losing some of their money.
In previous guides have already been addressed issues like ten most common errors in the operation on the stock market or basic tips to invest and trade on an exchange. We must not lose sight and point out that stock market is easier to get carried away by emotions that in other financial areas.
Finally there is nothing better than to see a structure an investment portfolio through two examples. The first comes from the hand of George Proud of clasesdebolsa.com explains how to create a portfolio with 300,000 euros.
The second example is provided by David Swensen, a professor at Yale University and in charge of managing its investment portfolio and one of the great gurus of the world economy. The teacher prepares an investment portfolio for the Spanish investor type (conservative profile / fearful and long-term investments). Equities gets 50% of the capital by 20% of the housing market and 30% in bonds. Obviously the portfolio is something 'out of date,' but what matters is not the specific composition, which may vary depending on the environment and the economic moment (in times of crisis, debt acts as a shelter and money is often out of equities and the bag).
In fact, what is significant is the way that explains why each element of the portfolio. Swensen himself proposes an overall strategy in this case on the time of investment for years to come.
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