What portion of your salary should you spend on loan EMIs?
Most people buy a house or a car by taking a loan from the bank, but do you know what is the maximum portion of your salary that you should spend on EMI? What is the 40 percent EMI rule? What are the disadvantages of spending more on EMIs? Among home loan, personal loan, auto loan and credit card bills, which loan should you eliminate first?
As an investor, to maximize your investment portfolio’s value, you must be actively involved in portfolio management. By doing so, you will be able to protect your money from market hazards and be able to maximise the profits properly. Let’s understand what is portfolio management and its crucial objectives are:
Understanding portfolio management
Portfolio management can be defined as the process of managing an individual’s investments to maximise earnings over a specific time period. Additionally, such measures ensure that individual investors’ capital is not overexposed to market risk.
The ability to make informed decisions underpins the entire process. Typically, such a decision refers to developing a profitable investment mix, allocating assets by risk and financial objectives, and diversifying resources to counteract capital erosion.
Portfolio management primarily runs through the analysis of several investment options with investors’ aims versus their risk tolerance. As a result, it contributes to creating considerable earnings and the protection of such earnings from risk.
What are the objectives of portfolio management?
The primary goal of portfolio management is to assist in selecting the best investment options based on one’s income, age, time horizon, and risk tolerance. The following are some of the primary objectives of portfolio management:
Capital augmentation
Increasing return on investment
to boost the portfolio’s overall proficiency
Risk reduction
Optimal resource allocation
Portfolio flexibility is ensured.
Earnings protection against market risks
Nonetheless, investors should select a management style that matches their investment pattern to get the most out of portfolio management.
Who can consider portfolio management?
-Investors who want to invest in various investment avenues such as bonds, equities, funds, commodities, and so on but lack sufficient knowledge of the complete process.
-Those with insufficient knowledge of the financial market.
-Investors who are unaware of how market dynamics affect investment returns.
-Investors who do not have enough time to track or rebalance their investing portfolio.
-Individuals must implement tactics that meet the investor’s financial strategy and prospect to make the most of the managerial process.
To put it another way, effective portfolio management enables investors to create an investment strategy that suits their financial situation and risk tolerance. By using competent investment portfolio management, investors can lower their risks and obtain tailored answers to their investment-related concerns.