Investment Portfolio Management

Create an investment portfolio is not the ultimate solution for tension-free retirement living. When you have created a portfolio, it is equally important to revisit and analyze it frequently.

What are the assets in an investment portfolio?
The assets in a portfolio could be the following:

  • Bonds: A Bond is a type of credit made by an investor to a company, government, a centralized agency or other organization.
  • Future contracts: A future contract is used to buy or sell a certain underlying instrument at a certain time in the future, at a particular rate.
  • Gold certificates: A gold certificate is a certificate of ownership for gold owners.
  • Real estate: It refers to a piece of land, including anything permanently attached to the land, such as buildings.
  • Stocks: A share of stock represents a share of ownership in a corporation.
  • Warrants: A warrant is a security that gives the holder the right to buy stock of a company issued at a particular rate. The price is usually higher than the stock price at the time of issuing.

Any other item supposed to retain its value.

What is portfolio management?

Portfolio management involves decisions regarding what assets to include in the portfolio. You may base your portfolio management on the following considerations:

  • What assets to purchase
  • How many to purchase
  • When to purchase
  • What assets to divest

Assets allocation is one of the first steps in creating a diversified investment portfolio. It is a concept that helps you decide where to put your funds in order to minimize risks and maximize returns. Choose a mix that is ideal for you with the help of a financial planner or various interactive tools available online.

Portfolio formation Strategies that help form a portfolio are:

  • Equally-weighted portfolio
  • Capitalization-weighted portfolio
  • Price-weighted portfolio
  • Optimal portfolio

Calculation of portfolio returns


Portfolio returns may be estimated either in absolute manner or in relative manner. The absolute manner is uncomplicated: where return is calculated by considering total investment and total final value. To compute the return of the investments more accurately, complicated statistical models like Internal rate of return or Modified Internal Rate of Return can be used. Time is a major factor in these models.