The things you need to know about portfolio management

The capital market is a tremendous tool at our disposal so that we can allow our money to work in our place.

This is a device with very great potential, one that lets our money just work in our place while we stay in peace all the way, all the time.

Portfolio management is an action that many prefer to do on their own, today there are apps that allow even those who do not understand the field at all to go and play in the field of the big ones like any investor. But, what those who go out to invest alone do not always know is, that this is actually a profession for all intents and purposes.

Managing an investment portfolio is a job that requires not only knowledge and understanding of the game tools that dictate the market. We usually talk about work that includes, among other things, an understanding of the human psyche. The ability to deal with risks and contain them, not to act recklessly and act wisely, is not an ability reserved for everyone.

This is why even talented, smart people, those who know a thing or two, prefer that there be others who will do the work for them. Managing an investment portfolio is an action that can make you big rich or poor poor in one day. You must go the way wisely, from a long-term perspective, as you surround yourself with professionals who know their job.

What are the options before us in the process of managing an investment portfolio

Although we are now explaining the principle in a big way. Of course there are many details that need to be considered wisely down the road. It is important to note that when we talk about portfolio management we are actually talking about two types of investment channels:

  1. High-risk investment channels: High-risk investment channels are all that can turn out to be an innovative invention whose stock soars at once and can make its investors very rich in one day. This happened, for example, with Bitcoin or with the Tesla stock. It is important to note that equally these stocks can collapse. A great example of this is in the case of We Work a company whose stock quickly climbed and suddenly plummeted to a complete crash. The reasons for the sharp fluctuations are not the same anyway. But there is no doubt that these are investment channels that are not suitable for everyone.
  2. Low-risk investment channels: Naturally, when it comes to low-risk investment channels, the size of the profit necessarily becomes smaller respectively. But these are usually avenues that over time will prove themselves. Low-risk investment channels can be investing in Nasdaq, bonds and other channels where the distribution of money is between countries, which are of course a financial institution that usually does not fall apart easily, as in the case of the Nasdaq index that distributes money among large companies in the United States, China, Israel And so on, that is, between various, relatively large financial institutions, whose share will indeed be expensive but it is not going to plummet rapidly in the near future.

How to choose the right route

The degree of risk that the investment portfolio takes depends first and foremost on the nature of the client as well as his needs. If we are talking about a long-term investment, it will usually not be a problem to take risks that can be corrected later. This is in contrast to other cases where, when the money is needed in the immediate term, i.e. in the coming years, it will be better to take low risk routes that will not lead to the loss of the money completely.

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