Managing your portfolio can sometimes be a complex and time consuming undertaking; involving continued analysis and adaptation. Whether you choose to self-manage or outsource all or part of the investment management responsibility, the tasks involved are much the same – generally investment management can be broken out into distinct, yet related processes which include:
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1. Define Objectives
Quantifying financial goals in terms of your desired (required) rate of return and risk tolerance can be a highly subjective task. Though the ideal of investment portfolio optimization may be to seek the maximum potential return given the applied constraints, how you perceive and react to various risks will play a key role in how your investment portfolio should be constructed…more -
2. Asset Allocation
For many Canadians, a home often represents their largest single asset. Real estate however is just one of several asset classes – how you choose to diversify your various investments is referred to as asset allocation. From an investment management standpoint, asset allocation is statistically the single-most important decision in portfolio construction and is influenced by one’s goals, time horizons, risk tolerances, income and liquidity needs...more -
3. Portfolio Construction & Implementation
Having decided on an appropriate asset allocation strategy, you must next consider securities selection and implementation. Whether you choose a portfolio comprised of individual stocks and bonds and/or other equity and debt-like securities or prefer a managed investment solution, your portfolio may benefit from the inclusion of multiple asset classes, investment management styles and geographic (market) diversification...more -
4. Review & Rebalance
Over time the movements of capital markets may cause a portfolio to stray from its original target asset allocation. Without rebalancing the portfolio composition could become increasingly varied from the initial target asset mix; no longer reflecting the original intended risk/reward characteristics. Rebalancing is a proven strategy to ensure that your portfolio maintains its risk profile...more
