Being a Better Investor; Part 1: Portfolio, A Risk Management Tool

ShareSansar, March 13:

As an investor, it is very important to think about how to maximize profit from your investments and minimize losses. Finance professionals and experts talk about investment baskets and not putting all of one’s investments in a single basket. But what is this basket they are talking about?

Smart investors world over have been benefitting from the simple method known in the financial world as “portfolio management,” which involves spreading the risks by investing in a wide array of financial assets.


Portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, as well as their mutual, exchange-traded and closed-fund counterparts.

Portfolio management relies on a simple concept that not all investments yield profit all the time and it is better to put one’s money in a variety of financial products based on his/her risk tolerance, investment time frame and investment objectives.  

Portfolio investment does not have to follow any particular trend. Each investor must consider his/her capacity to tolerate risks in view of the uncertainty in the market, the duration till which he/she is willing to wait for the investment to pay off, and investment objectives.

The investors must bear in mind that the monetary value of one asset may influence the risk/reward ratio of other investments in his/her portfolio.

Portfolios may be held by individual investors and/or managed by financial professionals, hedge funds, banks and other financial institutions.