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Portfolio management allows investors to avoid the catastrophic effects of investing in a single security. Investors should not invest in just one security, but should broaden their portfolios.
Fremont, CA: Individuals and institutions also face the task of choosing how to invest for future needs. That may be to finance the retirement needs of people or to fund potential obligations in the form of insurance claims for insurance firms. For investors, the question is whether they should evaluate and invest in each security in isolation or take a portfolio approach (analyzing individual securities regarding their contribution to the entire portfolio).
Some of the key advantages of portfolio management are:
Helps to prevent disasters
Portfolio management allows investors to avoid the catastrophic effects of investing in a single security. Investors should not invest in just one security, but should broaden their portfolios.
Optimal Allocation of Funding
Portfolio management can help investors with limited funds invest and optimize their returns. It provides an effective structure and different appraisal models for investors to decide precisely how much returns they want and how to get it. This organized approach makes it easy to allocate and make use of restricted funds.
The disadvantages of portfolio management:
No Safety from the Downside
While portfolio management helps to mitigate downside risk, it does not offer substantial downside security. During the downfall or crash, it becomes useless because there is no technique in fund management to avoid such scenarios.
See Also:
Top Enterprise Security Solution Companies
Top Enterprise Security Consulting/Service Companies
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