Objectives Of Portfolio Management
Previously we understood the concept of Portfolio Management now let us learn some of the objectives:
- To choose the right kind of assets according to a person’s age, income, budget, long-term goal, risk-taking capacity, etc.
- Aim to provide capital appreciation through earning consistent returns.
- Understanding the needs of individuals and customizing their portfolio according to the investor’s preferences and objectives.
- Balancing risk and return optimally so that an individual obtains desired returns while staying within their risk limit.
- Achieve diversification of portfolio to minimize the risk of exposure in a single asset class. This also helps clients to obtain the desired liquidity. Diversification has been discussed in detail later in this module.
- Portfolio management may also take into account tax-saving criteria, thus investing in avenues which help an individual effectively plan their taxes.