Relevance of Portfolio Management in the Present Day World: -

Topics: Investment, Financial services, Finance Pages: 6 (2161 words) Published: March 9, 2011
RELEVANCE OF PORTFOLIO MANAGEMENT IN THE PRESENT DAY WORLD:- Individuals, households, organisations have income and equally have expenditures also. However, with all these they manage to save some money. Others who have excess income will necessarily find means to park(invest) their surplus/ savings or hard earned money. Before investing, a man of ordinary prudence contemplates about different possibilities of risk, returns and instruments/ assets (portfolio) to which he has to rely upon. Each instrument assures a certain return/income. The different instruments available to investors are equity shares, debt (debentures), bonds, bank deposits, post office savings schemes, gold, silver, commodity and the Like. Apart from these now investment patterns have changed with layman. The real estate has witnessed a boom in the last decade. These pool of investments are called portfolios for investments. Based upon the returns aspired and risk appetite, an individual opts for the portfolio that would maximize his returns. Opting or choosing risk-free securities (i.e., government securities) assure a specified fixed return without any risk involved as to returns and refund of investment. But, shunning away from taking risk as to investments makes an investor to lose out on the fun in earning over and above the normal returns by taking risk. So is that investors tend to take risk and invest in other instruments also to earn superfluous returns which we call as risk premium in the portfolio management. There are risk taking and dynamic investors who tend to take risk. They tend to follow the intuitions in investment decisions. Investment market is a place where people of various interests are found. But it must be understood that market offsets all of these discrepancies and manifolds itself into an wholesome package accommodating everyone from small investors to corporate investors. When we speak about risks involved in investments, an investor has to decide upon the various investments he has to choose among the alternatives available. An investment program has to backed by a strong financial planning. Because our priorities keep changing at every stage of life cycle. This call for planning of finances and apportioning money across various priorities in life. Having decided upon the quantum of funds , one would be willing to invest and chosen the alternatives, it does not mean that investor’s task is over. It is rather far from over. He has to evaluate and revise his portfolios. This is necessitated because of the dynamic environment in the investment circles, changing policies, emergence of new instruments/means and so on and so forth. Speaking about the investment markets, for those who follow the investment market, it is not possible to predict the future market tendencies because of the influence of various extraneous variables/factors/forces affecting it. Today, we have various business news channels like NDTV profit, CNBC TV 18, etc., business newspapers like Business Standard, Economic Times,etc., business magazines, business analysts etc., giving expertise to investors, analyzing closely the market, giving details about the various aspects of the market to the investors. The emergence of various stock broking institutions like Share Khan, Karvy group of Consultants, Oswal, etc., giving professional guidance to investor has made it little easier to the investors of ordinary prudence to get the market mechanisms right. When we speak about professionalism in investment decisions, there are various theories, statistical tools, quantitative techniques tools and many other software packages that help in evaluating investment alternatives. There are researches which are carried across the world to get into the crux of investment arena, understand the dilemmas, explore the newer dimensions etc., However it is difficult to bring out the delicacies underlying the market psychology, investor attitudes, behavioural aspects in finance...
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