Introduction to Financial Planning: Asset Allocation and Investment Selection for Balanced Investors

This presentation covers the characteristics of balanced investors, asset allocation, and investment selection for financial planning. It explains the risk and return characteristics of securities and the importance of choosing the right mix to achieve financial objectives. The presentation also emphasizes the need for research before investing in securities and how the right investment can lead to the accomplishment of financial goals.

Introduction to
financial
planning

INTRODUCTION
 Security selection plays the vital
role in appropriate return for the
longer period of time from the point
of view of investor.
 The selection of the security
whether long or short term depends
upon the ability of the investor to
take risk in their portfolio.

Characteristics of Balanced type of investor
 The funding goal of a balanced investor is to gain a stability of protection, profits and boom with
protection and profits rating earlier than boom in priority.
 A Balanced portfolio seems to make investments round 50% in boom assets (e.g., equities and
property) and the rest in shielding assets (eg coins and stuck profits). The determine of 50% is a
widespread benchmark; real allocations over the years will range round this as funding situations
alternate and funding managers take possibilities to enhance returns.
 This portfolio fits those investors who choice a modest degree of capital balance however is
inclined to simply accept slight funding cost volatility in go back for ability funding performance.
Such a portfolio is appropriate for those investors with a medium time period funding time body.

Asset allocation and selection of investment for
balanced investor
 By together with asset classes with funding returns that flow up and down beneath Neath
extraordinary marketplace situations inside a portfolio, an investor can shield towards full-
size losses.
 Historically, the returns of the 3 primary asset classes have now no longer moved up and
down on the equal time.
 Market situations that reason one asset class to do properly frequently reason every other
asset class to have common or negative returns.
 By making an investment in a couple of asset class, lessen the danger that investor will lose
cash and their portfolio’s normal funding returns could have a smoother ride.

Appropriateness of investment choices for investor
Importance of choosing the right mix to achieve
financial objective:
 Portfolio creation is all approximately making an
investment in a number of markets and techniques to
create the maximum suitable funding answer for
investors.
 To do that successfully calls for a knowledge of
ways numerous kinds of investments work, and an
cap potential to mix them in order that they cope
with exclusive funding objectives, desires and
elements along with hazard appetite.

Risk and return characteristics relating to security so selected:
 Risk in funding exists due to the lack of ability to make best or correct forecasts.
Risk in funding is described as the range this is possibly to arise in destiny coins
flows from a funding.
 The extra variability of those coins flows suggests extra threat. Variance or
preferred deviation measures the deviation approximately predicted coins flows of
every of the viable coins flows and is referred to as absolutely the degree of
threat; whilst co-green of variant is a relative degree of threat.

CONCLUSION
 Investing in the security requires lots of research as the funds invested are
at the risk if investing in wrong stocks as market always fluctuates with
multiple factors and those investors who have the ability to hedge the
market can survive easily with less efforts.
 This statement is all about stocks, investor risk and returns and how
investment in security will lead to accomplishment of financial goals of the
organisation.

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