Investment Portfolio Strategies – What You Need to Know! – 2011 and Beyond
The world of investment and finance is dynamic. After the recent credit crunch, portfolio managers have become increasingly aware of the need to review and change strategies to match the demands of today and the future. A portfolio consisting of stocks, mutual funds and bonds for example may not be the best mix today. Knowing the right strategies to employ in this highly unpredictable global financial environment is key not only to the portfolio manager but also their clients not forgetting other individuals and interested parties.
Over the years, investors have concentrated on having a portfolio diversified with stocks and bonds with a little percentage higher in favour of bonds. This is because investors saw stocks to fluctuate more than bonds; hence there was wisdom in holding such a balance in a portfolio. If the prices of commodities such as gold, oil, diamond, Ivory, etc continue to rise as being observed now, then inflation together with interest rates will also rise forcing bond prices to fall. The trend of commodity price increases shows no signs of coming down anytime soon.
For these reasons, it is relevant for investors in stocks to also hold a diversified stock that include stocks from other countries (international stocks). For the years ahead, the best portfolio will also include stocks from the oil and gas sectors including real estate not to mention gold- with little reservation. It is also important for investors to reduce their investments in bonds or invest in only short-term and medium term bonds whilst avoiding the investment of long-term bond funds. It will also be beneficial for investors to also hold portfolio that includes some carefully selected fixed and floating money make instruments.
It is also important also to note that investors with reasonably small amount of money to invest should avoid stocks since the dividends that may be realize from this kind of decision may not be enough to support an already bad financial circumstances. Also investors who will expect a return or profit every year should also avoid stocks since dividend payments and capital gains may not be guaranteed. This is because dividend payment is largely at the discretion of the board of directors who may decide to announce the use of the profits generated for more income generation activities supposedly in favour of the company.
If you really want value for money concerning your investments, then a portfolio strategy that employs the commodities above is the way forward for 2011 and the future. These will provide you with the balance to withstand all the economic turbulence.