Portfolio Construction
Analyzing the construction of your portfolio is necessary to ensure that you have the correct asset allocation according to your objectives, time horizon and risk tolerance.
Portfolio construction refers to a process of selecting the optimum mix of investments for the purpose of achieving maximum returns with the minimum risk.
Long term investment returns are determined by the types of assets held in your portfolio. The perfect mix is individual and includes an assessment of factors including: risk tolerance, personal income level, age range and investing time horizon. Depending on these various factors, a portfolio mix (equities vs bonds vs cash) can be determined to provide the highest possible probability of achieving a desired long-term rate of return while at the same time minimizing short-term financial risks.
Growth focused assets help offset the long-term risk of inflation, but the rewards of growth also involve the short-term risks of enduring market volatility and uncertainty.
By measuring an investor’s short and long term investment goals against various investment possibilities and return probabilities, a professional advisor can assist an investor in determining the portfolio mix best suited to their unique situation.
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