Investment Analysis and Portfolio Management

10645 Words43 Pages
EXECUTIVE SUMMARY In an economy, people indulge in economic activity to support their consumption requirements. Savings arise from deferred consumption, to be invested, in anticipation of future returns. Investments could be made into financial assets, like stocks, bonds, and similar instruments or into real assets, like houses, land, or commodities. The aim of Portfolio Manager is to provide a brief overview of three aspects of investment: * The various options available to an investor in financial instruments. * The tools used in modern finance to optimally manage the financial portfolio. * Lastly the professional asset management industry as it exists today. Returns more often than not differ across their risk profiles,…show more content…
First, income, like age, influences the choice between dividend-paying or interest-paying investments, and those whose primary return is in the form of capital gains. You may prefer income-producing investments if you need to supplement or replace earned income. Your income level also affects your investment choices because it determines your tax rate. Low-tax-bracket investors — generally those whose income is lower — will be more likely to prefer income-producing investments. High-tax-rate investors are more likely to choose tax-deferred or tax-sheltered assets. Income also may influence risk preferences. High income investors may be more willing to choose higher risk investments since they can more easily contribute additional investment capital should they sustain losses. Taxes Your after-tax return is the return that matters. You should fully inform your investment advisor about your tax rate and any special tax circumstances that might apply to you. This will determine whether you should seek tax exempt or tax-sheltered securities as a part of your portfolio. The appropriateness of income or capital gains should be discussed in the context of your personal situation, so you may want your investment advisor to consult with your accountant. Occupation Your occupation also can affect portfolio objectives. Some professions produce more stable incomes
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