Business Portfolio Planning

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The portfolio review then determines if the allocation is still on target to track the investor’s risk-reward profile.

If it is not, then the portfolio can be rebalanced, selling investments that have reached their targets, and buying investments that offer greater upside potential.

The investor can also assign percentages to various asset classes, including stocks, bonds, cash and alternative investments, based on an acceptable range of volatility for the portfolio.

The asset allocation strategy is based on a snapshot of the investor’s current situation and goals, and is usually adjusted as life changes occur.

For example, the closer an investor gets to his or her retirement target date, the more the allocation may change to reflect less tolerance for volatility and risk.

Individual investments are selected based on the parameters of the asset allocation strategy.

The specific investment type selected depends in large part on the investor’s preference for active or passive management.

An actively managed portfolio might include individual stocks and bonds if there are sufficient assets to achieve optimum diversification, which is typically over

Individual investments are selected based on the parameters of the asset allocation strategy.

The specific investment type selected depends in large part on the investor’s preference for active or passive management.

An actively managed portfolio might include individual stocks and bonds if there are sufficient assets to achieve optimum diversification, which is typically over $1 million in assets.

Once an acceptable risk-return profile is developed, benchmarks can be established for tracking the portfolio’s performance.

Tracking the portfolio’s performance against benchmarks allows smaller adjustments to be made along the way.

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Individual investments are selected based on the parameters of the asset allocation strategy.The specific investment type selected depends in large part on the investor’s preference for active or passive management.An actively managed portfolio might include individual stocks and bonds if there are sufficient assets to achieve optimum diversification, which is typically over $1 million in assets.Once an acceptable risk-return profile is developed, benchmarks can be established for tracking the portfolio’s performance.Tracking the portfolio’s performance against benchmarks allows smaller adjustments to be made along the way.Smaller portfolios can achieve the proper diversification through professionally managed funds, such as mutual funds or with exchange-traded funds.An investor might construct a passively managed portfolio with index funds selected from the various asset classes and economic sectors.Planning for the future requires having a clear understanding of an investor’s current situation in relation to where they want to be.That requires a thorough assessment of current assets, liabilities, cash flow and investments in light of the investor's most important goals.Establishing investment objectives centers on identifying the investor’s risk-return profile.Determining how much risk that an investor is willing and able to assume, and how much volatility that the investor can withstand, is key to formulating a portfolio strategy that can deliver the required returns with an acceptable level of risk.

million in assets.

Once an acceptable risk-return profile is developed, benchmarks can be established for tracking the portfolio’s performance.

Tracking the portfolio’s performance against benchmarks allows smaller adjustments to be made along the way.

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