portfolio management in stock market

Portfolio meaning: A collection of financial instruments like ETFs, Stocks, Bonds, Commodities and Gold is called a portfolio. Stock market portfolios are made for long-term investments and to manage risk. In this article you will get complete information related to portfolio. When new people come to the stock market, they do not have information about the portfolio. After reading this article you will learn to create your own portfolio.
     

What do you mean by portfolio?

As we told you, that portfolio means investing in many types of financial instruments. The objectives of creating a portfolio can be different. It is not necessary that everyone's portfolio be the same. Some people make a portfolio for long-term investment for their children's future, and some make a portfolio for income.

Suppose you have Rs 5 lakh, and you want to invest it. Instead of investing these five lakh rupees in one place, you can make your portfolio by investing some part in different places like stocks, bonds, index funds and instruments like gold.

 

What is included in the stock market portfolio?

Investing in Stock:- 

It is very important to have stocks in the portfolio. Having stocks in the portfolio increases returns. If the stock is good, then there is no limit to its growth, and it is also capable of multiplying the money. Stocks like MRF and EICHERMOTOR have given a lot to investors. It is very beneficial to keep stocks whose fundamentals are good in your portfolio. You can read the article on fundamental analysis for how to choose a good stock.

Investing in ETF:-

 With its help you can balance your portfolio. Having ETF in your portfolio will give you stable returns. You can keep ETFs in your portfolio for long term investments. Stocks may be zero, but indices will never be zero. Therefore, investing in ETFs is beneficial for stability.

 

Gold Investment:-

 As you know the demand for gold is high and the supply is small. In such a situation, gold can give good returns in the long run. The price of gold has only increased with time. Therefore, gold is kept in the portfolio. Most investors like to invest in gold.

 

Investing in bonds:-

 Investing in government bonds is also a part of the portfolio. Investments can be made in the bonds issued by the government. However, not everyone likes to invest in bonds. It depends on you how much risk you can take. You can invest in bonds through your broker.

Investing in Dividend Stock:-

 If you invest in the stock of a good company, then it gives you a dividend in the quarterly results. Out of its profits, the company also gives profits to its shareholders. To get regular income, investors keep such stocks in their portfolio which give both dividend and growth. Such stocks reduce the risk of the portfolio.

 

Investing in Mutual Funds and SIP:-

 If you do not have knowledge of the stock market and cannot give time to the market, then it will be beneficial for you to invest in mutual funds and SIP. This is a financial instrument that will give you good benefits in the long term. You can make it a part of your portfolio by investing in SIP or mutual funds as per your wish.

 

Investing in Commodities:-

 If you are willing to take risks then commodities can also be included in the portfolio. In this, investments are made in assets like natural gas, gold, silver, and platinum. Not everyone has interest in commodities, but those who know how to take a little risk invest a little in all financial instruments.

All these instruments come in the stock market portfolio. By investing in these, your own portfolio is created, and you can see it in one place through your broker. The purpose of making a portfolio is that when stocks do not give you returns, you may start getting profits from other sources like gold or bonds.

 

Other Alternative options for portfolio

Fixed Deposit:-

 As you know, you can get returns of about 7 percent annually from fixed deposits. If the fixed deposit is in a government bank, then your risk is also less. People who want to earn income make fixed deposits. You can earn income through fixed deposits annually or monthly, whatever option the bank gives you. This will also manage your risk.

 

Investment in property:-

 Investment in property, i.e. real estate, is beneficial in the long run. What a portfolio means is that you can make profits by investing in multiple financial instruments. People invest in real estate as per their wish and get benefits in the long run.

Investments in fixed deposits and real estate are done separately from the stock market. This option is for investors who can build a larger portfolio. The more you invest in financial instruments, the risk will be reduced. When real estate booms, investments in real estate will increase and when stocks rise, stocks will give you profits. That means a big portfolio will keep giving you something or the other. You also know that every financial instrument has a different time for growth.

Types of Portfolios

Income Portfolio:-

If you want to increase your income, your portfolio should include dividend yielding stocks, fixed deposits, stocks, or bonds. It is important to have these financial instruments in your portfolio to get regular income. There is not much risk in this.

Risky Portfolio:-

In this type of portfolio, some financial instruments are kept which have high risk. Only that money is invested in a risky portfolio whose loss does not make much difference to you. Risky portfolio invests in assets that are growing rapidly. These may include risky stocks or mutual funds. Where there is more risk, if growth starts happening then the investment gets multiplied.

How to create your portfolio?

Know your risks and objectives.

If you want to create your own portfolio, then first you need to know what the purpose is of creating your portfolio. Wherever money is invested there is always risk. If you are a low-risk investor then fixed deposits, ETFs, dividend stocks, mutual funds and bonds are good options for you.

For example, if you have ten lakh rupees, you can give equal share to all these options. You can give more percentage to what you feel is safest and less percentage to what you feel is risky.

 

Portfolio diversification is important.

If you want to make a stock market portfolio then you must diversify your portfolio. If you invest in stocks from different sectors, your portfolio will not be completely affected. If there is a recession in one sector, then if the other sector is bullish, your portfolio will remain balanced. Do not invest all your money in stocks of one sector.

Regular investment is important.

If your income is increasing with time, you will have to increase your investments also. By doing this you will get higher returns in the long run. A successful investment is one in which the investment amount increases over time.

Reduce investment expenses.

If you want to build a successful portfolio, it is important to think long term. Portfolios should never be made for a short period of time. You should not be afraid of market fluctuations. You can reduce your investment expenses by using a discount broker to buy and sell shares.

If you buy or sell shares repeatedly, your investment charges i.e. brokerage will increase. Often people sell their stocks in panic and spoil their portfolio.

conclusion:

The conclusion of this article is that you can create your portfolio by investing in different financial instruments. Instead of investing all the money in one place, it is better to invest it in many different instruments. You must understand that where money is invested there is also risk. But to reduce the risk, a portfolio can be created which gives you good returns and your entire money does not go into risk. Sometimes it may happen that the stocks you have bought rise well and then they turn into a waste of your money.

FAQ:

What is a portfolio?

A collection of financial instruments such as stocks, bonds, ETFs and gold is called a portfolio.

 

What is the purpose of creating a portfolio?

The real purpose of building a portfolio is to achieve your goals and become financially strong.

What is portfolio risk?

What is risk in an investment portfolio? Risk in an investment portfolio can be defined as the possibility that the actual return from your total investment will be less than the expected return. Sometimes, it may also mean losing a part or all of your original investment, thus affecting your financial goals.

How do you calculate portfolio?

The calculation is simple enough. Simply divide each of your stock position's cash value by your total portfolio value, and then multiply by 100 to convert to a percentage. These weights tell you how dependent your portfolio's performance is on each of your individual stocks.