Investment Portfolio Models

Here are 5 investment portfolio models for investors to select and create goal based investment portfolios. It discussing about the common portfolio models, capital preservation, regular income, growth and income, long term growth and aggressive growth portfolios.

Also discussing about the nature of investment portfolio models, investment instruments in each portfolio, advantages and disadvantages of each would give readers an exact idea on each investment portfolio models.

Capital Preservation portfolio

With capital preservation portfolio, an investor invests only to the instruments that provide guarantee to the invested capital.

Capital preservation portfolio typically advisable to the investors who have low risk taking capacity or an investor is near to the retirement or leading retirement life..

Best investments to create capital preservation portfolio

Government secured bonds, money market instruments such as fixed deposits, post office investments, endowment insurnace plans, liquid and debt oriented mutual funds, gilt funds, fixed maturity mutual fund plans etc.

Advantages of capital preservation portfolio

Major advantage of the capital preservation portfolio is its guarantee on invested capital. As it is invested only to the capital guaranteed products, invested capital is safe from possible reduction

Disadvantages of capital preservation portfolio

Major disadvantage of the capital preservation portfolio is, the return yield. Return yield withing this portfolio will be fixed and very low. Also, capital preservation portfolio doesn’t have the ability to beat inflation due to its fixed yield nature.

Regular income portfolio

This portfolio generally consists bank fixed deposits or such guaranteed investments, can yield fixed income to the investor in a specified duration.

This is the best portfolio model suggested to people who is already retired and not have any income to survive. This is a good portfolio for the old aged people.

Best investments to create regular income portfolio

Bank fixed deposits, Mutual fund monthly income plans (MIP) and Fixed Maturity Plans (FMP), Post office monthly income plans or similar, providing interest to the depositor time to time. Any instrument that is capable to provide income to the investor within a specified duration along with capital guarantee, can be added to the regular income portfolio model.

Advantages of regular income portfolio

Major advantages of the regular income portfolio is, it is similar to the capital preservation portfolio, low risk portfolio, generates regular income to the investor for a specified duration.

Disadvantages of regular income portfolio

Regular income portfolio yields fixed income thus growth of the income is limited. It is also not capable to beat inflation because of fixed yielding nature and prevents growth of invested capital.

Growth and income portfolio

Portfolio comprising good proportion of investments, capable to give regular income as well as growth of invested capital.

This portfolio models is suitable for middle aged investors as well as those are willing to take moderate risk taking capacity. This portfolio is suitable to investors like to have investment exposure and in the same time not able to take high risks.

Best investments to create growth and income portfolio

Exchange Traded Funds (ETF), balanced mutual funds, government bonds, blue chip stocks or large cap mutual funds.

Advantages of growth and income portfolio

This portfolio model can meet timely money requirements of an investor as well as capital growth advantages from economy growth. It provides comfortable exposure to the capital market with moderate risk products such as largecap stocks and equity mutual funds focused to large cap stocks.

ETF investment provides sufficient investment exposure through spanning the capital across a set of well know companies and balanced mutual fund provide exposure to capital preservation products as well as equity products.

Disadvantages of growth and income portfolio

Yielded returns comparatively low complete growth portfolio model. with this portfolio, investors are not able to take full advantages from capital market and economy growth because because of the risk based proportion and investment products.

Long term growth portfolio

Long term growth portfolios are creating by adding investment products capable to yield great returns in a long run. This approach also known as contrarian investment approach.

Long term growth portfolio is suitable for investors who start investing at the young age with long term goals. It also suitable to people have above moderate risk taking capacity with stable income from other sources.

Best investments to create long term growth portfolio

Long term growth portfolio can have investment instruments such as Exchange Traded Funds (ETF), Gold investments, Real estate investments, good mix of large cap and mid cap stocks, good mix of equity mutual funds, international stocks and international equity mutual funds etc.

Advantages of long term growth portfolio

Long term growth portfolio is a best model for investors starting investments at the early age! This portfolio can generate wealth for long run. It have dollar cost averaging advantage as well as capable to take full advantageous from economy growth to grow the wealth to a great extend.

Disadvantages of long term growth portfolio

Long term growth advantage portfolio is not the one for short term goals. High degree of patience as well as investment discipline is mandatory to build and maintain long term capital growth portfolio. Investments in regular interval is necessary to build wealth than invest and forget model. Monitoring and balancing is a mandatory part of this portfolio, give burden to the investors time to time.

Aggressive Growth Portfolio

Aggressive growth investment portfolio model is superior than every portfolio mentioned above. It is suitable for investors with high risk taking capacity as well as focused on high returns with right investments. It is a best model for young investors to generate wealth by investing in high risk, high return products.

Best investments to create aggressive growth portfolio

Direct investments to stocks especially to best midcap and best small cap stocks, well mix of mutual funds from midcap, small cap, diversified, thematic, spaces are the best products to add in this portfolio. Adding weight to the fast booming sector stocks also a good option.

Advantages of aggressive growth portfolio

As said, this portfolio creating with high risky products. If risk shoot up, return also shoot up. Aggressive growth portfolio is and excellent option for investors to invest prudently and intelligently. Legendary investors love this portfolio model.

Disadvantages of aggressive growth portfolio

Aggressive growth investment portfolio model have great chance of capital lose if not investing prudently to the right instruments. Lots of homework required to find the right stocks, mutual funds or other investing products. Efficient control, monitoring and balancing required time to time. Weightage to a particular industry or instruments add more risks to the portfolio.

Conclusion

Investment portfolio models intended to help investors to create suitable investment portfolio as per their requirements. Acquiring knowledge is very important to do the same. Investors can seek assistance from qualified and experienced professional to create goal and risk based investment portfolio based on their age and requirements.

Never enter to the stock market directly without having right knowledge and if so that is risky to the capital. Read great investment books especially books from “Wiley investment classics” to acquire right knowledge.

Investments in the low risk products fetch low income and high risk product fetch high income. However, the risk level is different.