Asset Management

Designing an investment portfolio involves creating a policy to fit your needs based on various factors (investment goals, risk tolerance, and time horizon), choosing investments that match your policy, and implementing the design.

You can start out by asking yourself some basic investment questions. For example, why are you investing? Perhaps you would like to buy a house, or maybe you want to retire early. Next, ask yourself how comfortable you are with investing. Are you a cautious investor, or are you willing to take risks? Then, take into account your time frame for investing. Are you saving for your toddler's college education or to retire in a few years? Finally, determine what types of investments will best help you work toward your goals. In other words, what is the proper asset allocation for your particular situation? Your answers to these questions can be a starting point for constructing an investment policy and mapping out a portfolio design.

For more information on this topic, see Designing an Investment Portfolio.


Managing an investment portfolio

Once you have settled on a policy that reflects your attitudes about investing and a portfolio design that will help you pursue your goals, the next step is managing your investments. This is the subsequent selection of investments (the actual buying and selling) in keeping with the overall portfolio design.

Managing a portfolio is one of the most important steps in the investment process. Properly managing an investment portfolio requires knowing not only what investments to purchase, but also when to buy and when to sell them. In addition, managing a portfolio requires constant monitoring of performance, along with rebalancing and making adjustments as needed. Aside from the most savvy of investors, this part of the investment process is usually best left to a financial planner or advisor

Investing involves risk including the potential loss of principal. No investment strategy, including diversification, asset allocation and rebalancing, can guarantee a profit or protect against loss.