In conditions of crisis the theme of the recently concluded investment can be very relevant.The credibility of the securities returned.In one way or another economic course of the world's financial structures is to build a strong market economy with the necessary circulation of securities and vigorous investment activity in the conditions of long-term financial stability.That is why literacy, the optimal behavior in the market is inevitable and is of paramount importance.In such circumstances, investors feel the need for developed and efficient economic technologies.And so an important factor for active productive action is the creation of an investment portfolio.However, portfolio investments - what is this?What is their importance, and what are these technologies?
profitability and risk
difficult to find securities that are both highly profitable, highly reliable and highly liquid.Typically, the paper have one or two of the above properties.Investment portfolio - the distribution of building an investment portfolio among different groups of assets.The goals and objectives initially set by the formation of the portfolio, determine the percentages between the groups and types of assets.Literate the needs of investors in the formation of a portfolio of assets that would have combined the stable profitability and acceptable risk - a major challenge for any manager in financial institutions.Investment portfolio - this is a wonderful method of attachment that allows you to find a balance between profitability and risk.
Who invests
Attracting investment - a way of using financial resources for long-term investment.Investments are made by individuals or legal entities, which are divided into investors, players, speculators and entrepreneurs, depending on the degree of commercial risk.Who are they?The investor is more interested in minimizing risks.Entrepreneur invests at slightly higher risk.The speculator is willing to take some risks in advance.A player - that person is ready for any risk.Investments in Russia involve all participants - from large investors to the players and speculators.
types of investments
What are investing?Direct, portfolio, venture capital and annuity.It is necessary to understand each concept.
Venture - a risky investment, which are investing in new business areas that can show high returns, but also have a high degree of risk.Venture capital is usually divided between unrelated projects for fast return on investment.
Direct - are investments in the share capital of the subject to extract income and subsequently obtaining the right to participate in the administration and management of the entity.
investment portfolio - a process associated with the formation of the investment portfolio, which is a collection of purchased securities and other assets.Portfolio investment is the sum of the values that serve as a tool to achieve the objectives previously laid contributor.By and large financial investment portfolio may contain the same type of securities (shares), as well as a variety of value (bonds, mortgage certificates of deposit and savings certificates, proof of insurance, and so on).
Annuity - a type of investment that brings income to the depositor at regular intervals (pension and insurance funds).
Importance portfolio
Investment strategy is determined by such factors as the possibility of the direct investor and the state of the market.Portfolio investments have a number of advantages and features over other types of capital investment, thanks to the presence of the portfolio, which implies belonging to the legal entity or individual securities.On the developed stock markets portfolio already acts as a standalone product and its selling shares or entirely satisfies the requirements of the investor funds for investments in the stock markets.The market sold certain investment quality with the given parameters and the relationship between risk and return, which can be improved in the process of managing this portfolio.
attractiveness of portfolio investment
investment portfolio - a handy tool that allows you to monitor and evaluate the results of investment in different sectors of the market.As a rule, such a portfolio - a set of bonds and stocks with varying degrees of risk, as well as a number of papers that are government guaranteed a fixed income, that is, who have a minimal risk of losses on current income and principal.Creating a portfolio - is an attempt to improve and optimize the investment environment as a set of securities endowed with characteristics unachievable single paper, and perhaps only in combination.In the process of formation of an investment portfolio achieved a new quality with the necessary characteristics for a set of securities.Thus, the investment portfolio - a tool that provides the required rate of return with minimal risk.It is believed that these types of capital management demonstrate the maturity of the stock market in the country.This is absolutely true, as portfolio investments in Russia have been virtually impossible even in the mid-nineties.
Who cares portfolio investment
From a practical point of view, there are two types of interested customers.The first - those to whom there is a problem of placement of available funds.They are inert and large public corporations, various funds.The second type - a medium-sized banks, small brokerages that have caught customers' needs first type and push to lure the idea of portfolio investment.Naturally, in the territory of the CIS is difficult to talk about competent clients as the process of formation of professional stock market participants and qualified large investors is far from over.However, demand is increasing every year, as the market grows and investments (market portfolio).
Principles of portfolio
There are several key considerations that should be followed when creating an investment portfolio:
- investments must be safe (investment required to be as invulnerable);
- income must be stable;
- must adhere to considerations of liquidity of investments (that is, their ability to quickly buy or sell).
Naturally, none of the security does not possess all these qualities at once, potentially increases the risk of portfolio investments.However, the very concept of the portfolio involves compromise.For example, if a stock is reliable, it will have a low income, as they prefer the reliability will pay more and "shot down" income.Investment portfolio - is to achieve the optimum combination of yield / risk for the investor, that is a set of tools is to increase the maximum revenue and to reduce the risks to a minimum.This raises the question of how to determine the ratio between risk and return.There are a number of principles of construction of the classic portfolio diversification, sufficient liquidity and conservative.
first principle - Conservative
The relationship between risky and reliable installments should be such that the possible loss of income risky share covered by a reliable part.Investment risk is only in getting a low income, and not the loss of the principal amount.But, of course, without the risk can not be count on high incomes.
second principle - Diversification
By and large this is the basic principle of any investment portfolio.Its essence is to "not putting all your eggs in only one basket."That is not to invest in only one type of paper, no matter how beneficial this type of investment may seem.Such restraint to avoid damage.Reducing risk through diversification means that the low incomes of some securities will be offset by higher income from other securities.Attachments are arranged both between segments and within them.Ideally, risk is minimized by the inclusion of various types such thing as an investment business, real estate, securities, precious metals and so on.This is closer to the ideals of a large investment: regional and sectoral diversification.
third principle - sufficient liquidity
essence of the principle is to keep some of the fast moving securities not below an adequate level for the unexpected revenue transactions.Practice shows that profitable to keep part of the capital in highly liquid assets, because it allows you to quickly and efficiently respond to possible changes in market trends.
Income from portfolio investments
investment portfolio - it is one of the methods of investment, the income from which the gross profit of all securities that are included in this portfolio.However, there is the issue of compliance of profit and risk that must be addressed promptly.Portfolio is required to be flexible and constantly improve to meet the wishes of investors about the same risk / profit.In considering this question, as the creation of a portfolio, you need to define the basic parameters:
- selection of the optimal type of portfolio;
- assessment of appropriate combination of profitability and risk;
- definition of the initial composition of the portfolio of securities sorted by specific gravity (the level of risk / return).
Undoubtedly, the question arises, what are the types of portfolio investments.
main types of investment portfolios
Attracting investment portfolio by forming a distinct advantage in the form of operational solutions of different specific tasks.For this purpose, several types of the portfolio, which are, in fact, its main characteristics, based on the ratio of risk and return.An important feature for classifying portfolios - a source of income.This may be a rise in the cost or current payments - interest, dividends.Only two basic types: portfolio income (aimed at obtaining profits from dividends and interest), and portfolio growth (focused on the increase in value of investment property, comprising the portfolio).
Growth Portfolio
purpose of portfolio growth - profits from the growth in the value of assets.This type can be either aggressive (maximum profit, taking into account the high risk) and conservative (moderate profits and minimal risk).Aggressive portfolio is generally less stable, since it is based on promising young companies.Conservative is comprised of stocks of larger companies.He has a much greater stability and less risk, but also significantly lower yields.
portfolio income
portfolio income includes shares, which are characterized by their moderate growth rate and stable dividends.The purpose of this portfolio is to provide a stable income with minimal risk.Objects for this type of portfolio investment: reliable tools markets with a balanced ratio of the market value and interest payments.There are also two subtypes of this portfolio:
- regular income portfolios, which bring the average level of income, but formed reliable assets;
- income securities portfolios, which consist of bonds and securities which bring a higher income, but maintain the average level of risk.
combined portfolio of income and growth
combined investment portfolio - is an attempt to avoid losses from both lower interest or dividend payments, and on the fall in the value of the asset on the stock market.Some of the papers brings the rising cost of capital, while the other - the income.In this case the loss of one of the two parts will be compensated by the other.There are several kinds of this type of investment:
- Portfolios dual composed of securities that generate income owners with an increase in invested capital.In this case, refers to the securities fund of dual purpose, which produce two types of paper.The first focused on high income, and the second - on capital gains.
- balanced portfolio that suggest a balance not only income, but also the risks that accompany securities transactions.Therefore, this type of investment portfolio consists of approximately equal proportions of higher-yielding assets, and with fast-growing market of value.The composition of the portfolio may be included such instruments of the stock market, as the preferred and common shares, bonds.
portfolio structure and investment objectives
Evaluation appropriate combination of income and risk in accordance with the calculation of the proportion of the portfolio consisting of securities with different levels of income and risk - the main goal of any investor.This problem is a consequence of the general principle of acting in the stock market: the greater risk taken separately carries the paper, the more revenue it should have.This principle is true in reverse.It is this principle and must guide the choice of the type of portfolio and the further strategy guide them: conservative, aggressive, moderately aggressive, irrational, risky, unsystematic, highly reliable and low-income or vice versa.The structure of investment companies and portfolio management strategies are directly dependent on investment goals.
