What even is that?
Let’s rephrase it to say managing portfolios. Portfolios could mean multiple things, but whenever we say portfolio management, the portfolio we talk about is related to finance and investing, specifically. Officially, portfolio management involves making decisions about investing, achieving investment objectives, allocating assets (looking at your goals to see how you should apportion your investments between stocks, bonds, and other assets), and balancing between risk and performance.
In other words…
Portfolio management is the both the art and science of managing your investments to achieve your goals successfully and suitably. A lot of it is just recognizing opportunities against threats and strengths against weaknesses in different investing options – so that you make money!
This sounds like a lot of work.
Yes, it definitely can be. But that’s why there are many tools out there to help with it! Nonetheless, it doesn’t have to be a lot of work. There are two main types of portfolio management: active and passive. Active managing means constantly doing research and analysis to modify your portfolio of investments. Passive management, on the other hand, means simply investing in (or tracking) a market index (which already has a compilation of stocks and assets), like the Straits Times Index.
If I want to actively manage, what are the basic concepts?
First, you need to look at asset allocation. Only once you decide how much you want to invest in stocks, bonds, or other assets for one of your portfolios can you choose your investments.
Next, diversifying your investments is important. This means investing across different sectors – like retail, energy, and technology. Why diversify? Well it helps to reduce your risks and volatility. For example, when oil stocks took a large dip with all the oil production drama, investing in other companies would keep your portfolio relatively balanced.
The last big concept is rebalancing. This means making sure your portfolio stays on your decided asset allocation over time, by buying and selling as needed.
Well we hope that this gave you a short intro to portfolio management. Don’t freak out if portfolio management sounds daunting! This is where Robo-Advisories come into play and manage your portfolio for you!!
Gina Heng, founder of Miss Kaya and entrepreneur, noticed that the existing financial management services available sounded too complex, filled with jargon and hence too dull.
It is time for a change given the role women play in today’s world professionally and otherwise. Miss Kaya’s mission is to empower women and allow them to achieve financial freedom and live the lifestyles they want.