Investment Portfolio
1. Asset allocation decisions
To minimize risk as well as maintain and increase the amount originally invested, I chose to diversify my portfolios by combining stocks, bonds and cash savings in difference proportions.
I choose home market (UK market) to invest with the goal of maintaining a balance of income and capital growth. Investment in the UK is not bring high profit and fast but its safe and stable because less risk. Investing aboard will bring high return but the risk high also. Invest international market we may consider some types of basic risk. Initially, it is the change in trade policies, taxation and the regulation of government. Besides, the accounting standards vary from country to country. Differences in accounting practices can be affect to appearance of profitability and influence to the investor’s decision. Moreover, international investing involves securities denominated in foreign currencies (currency exchange risk), therefore, invest in UK market maybe the good choice.
My risk tolerance level of 22 is moderate to aggressive (coefficient of risk aversion A=2.5) (Bodie, Kane, Marcus, 2001) and I am looking for safety of principal and growth of capital and accept moderate amount of risk. The expected high returns for this portfolio at least 6% or more.
I have decided to allocate my assets among stocks; bonds and cash following charts bellows: After divide asset allocation, then I am going to conduct investment. It is depend on many factors such as market price, beta, dividend yield, standard deviation, coupon; risk of each security, my portfolio had change to suitable. The detail of each change was attack in appendix1. Base on all the data and calculation, after all, my final portfolio was allocation follow the chart below. 2. Evaluate the performance of portfolio
As we know that invest in stocks has more risks than the other but it expected return is high. I am willing to investment in stocks because making more profit
To minimize risk as well as maintain and increase the amount originally invested, I chose to diversify my portfolios by combining stocks, bonds and cash savings in difference proportions.
I choose home market (UK market) to invest with the goal of maintaining a balance of income and capital growth. Investment in the UK is not bring high profit and fast but its safe and stable because less risk. Investing aboard will bring high return but the risk high also. Invest international market we may consider some types of basic risk. Initially, it is the change in trade policies, taxation and the regulation of government. Besides, the accounting standards vary from country to country. Differences in accounting practices can be affect to appearance of profitability and influence to the investor’s decision. Moreover, international investing involves securities denominated in foreign currencies (currency exchange risk), therefore, invest in UK market maybe the good choice.
My risk tolerance level of 22 is moderate to aggressive (coefficient of risk aversion A=2.5) (Bodie, Kane, Marcus, 2001) and I am looking for safety of principal and growth of capital and accept moderate amount of risk. The expected high returns for this portfolio at least 6% or more.
I have decided to allocate my assets among stocks; bonds and cash following charts bellows: After divide asset allocation, then I am going to conduct investment. It is depend on many factors such as market price, beta, dividend yield, standard deviation, coupon; risk of each security, my portfolio had change to suitable. The detail of each change was attack in appendix1. Base on all the data and calculation, after all, my final portfolio was allocation follow the chart below. 2. Evaluate the performance of portfolio
As we know that invest in stocks has more risks than the other but it expected return is high. I am willing to investment in stocks because making more profit