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Objectives of portfolio management

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Objectives of portfolio management

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Objectives of a portfolio

Portfolio management deals with selecting, prioritizing and controlling an organization’s programs and projects in accordance with its strategic objectives and capacity to deliver. Most portfolio is best managed under the guidance of expert portfolio managers.

Objectives of portfolio management

  • Investment Safety
  • Stable Return Rate (SRR)
  • Higher Marketability
  • Capital Appreciation
  • Tax Planning
  • Optimum Liquidity

Investment Safety

Investment safety is a key objective of a portfolio since the aim of an investment is to maximize your returns on investments while minimizing risks to achieve your reason for investing thus investment must be kept safe. Most investor would prefer to breakeven rather than to run at a loss.

Stable Return Rate (SRR)

The reason for investing in portfolio is to gain the highest possible return from such an investment. An investment portfolio should result in a steady flow of return income once such investment is proven to be save either by an investment expert or a portfolio manager.

Higher Marketability

Investing in a poor performing investment might be very risky since it would be difficult to market or trade them to potential investors. It is equally risky to invest in new stock market since the future can not be predicted and as such it would be difficult for an investor to purchase such investment.

You need to invest in a high performing stocks, bonds or funds so as to market them with ease. A well-managed portfolio should consist of investments that can be marketed easily. It is important to note that an investment in established companies that are actively traded by other investors and such is listed on the stock exchange market has a high marketability level.

Capital Appreciation

The effect of inflation on the economy cannot be over-emphasized. A good investment portfolio should be created or focused on creating capital appreciation to protect its owner from the decrease in purchasing power caused by inflation or recession.

A good portfolio should have investments that are likely to appreciate in actual value after handling inflation.

Tax Planning

Individual investors should ensure they make plans to pay their tax as at when due rather than avoid it. Taxation is one of the most important for any individual with a regular flow of income. An investment portfolio should be created to meet the needs of tax payment. When an investment is properly managed, it would be capable of providing a supporting tax shelter for its owner. Investment should be created by taking into account all forms of tax relating to such individual these includes gift tax, capital gains tax etc.

A well guided investor would know that a good portfolio should among others, focus on proper tax planning rather than tax avoidance.

Optimum Liquidity

A good portfolio ensures that the owner has enough funds at a short notice to fulfil his liquidity or operational needs. This portfolio ensures that some amount of credit is kept aside to be used in case of an emergency.

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