Why do Investors Need Portfolio Management?

Why do Investors Need Portfolio Management?

Many see the stock market as the ultimate shortcut to earn big money in a short time. Those who know their stuff understand that the stock market is not for the impatient. It is for those who wait for the iron to get hot!

For those without prior knowledge, portfolio management is key.  As investor and business tycoon, Warren Buffett, once said, “Never invest in a business you cannot understand.”

A good portfolio management brings good returns on your investments.

How?

By distributing the assets and investments across different financial products and services. To make informed decisions for big returns, you need good portfolio management.

Undeniable Benefits of Portfolio Management

  1. The right choices 

Portfolio management focuses on selecting the right projects per the business goals, risk, resource availability, and other relevant criteria. The goal is to pick a project that will deliver maximum value to an organization.

  1. The right focus 

Many times, organizations or individuals lose focus on long-term plans as they get caught up in fixing issues and managing short-term projects.

Portfolio management helps bring back focus on the bigger picture. It aids in making tough decisions based on the company or individual’s long-term objectives.

  1. The right investments 

The main objective of portfolio management is to achieve maximum returns on investments. Finding the right investments needs a disciplined stance that enables exposure to different asset classes.


  1. The right readjustments and risks

Suppose an individual has a 60:40 mix of equity and debt investments. At some point in time, it can happen that equity starts performing very well.

This would enable a person to fetch more returns. After taking this opportunity, the original ratio of 60:40 can be maintained.


  1. The not-so-right adverse situations 

Doing business means accepting that an adverse situation can occur at any point. Active portfolio management enables companies and individuals in being ready to face those situations. This could start by focusing on having more liquidity in such times or investing in liquid funds.

How are you managing your portfolio? Tell us in the comment section.

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