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What Are the Different Methods of Personal Asset Management?

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  • Written By: Geri Terzo
  • Edited By: PJP Schroeder
  • Last Modified Date: 25 March 2018
  • Copyright Protected:
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    Conjecture Corporation
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Personal asset management could be fulfilled by organizing exposures to the financial markets in a way that is likely to deliver the desired results. Investment allocations could be made into any one or more asset classes, or investment categories, that are offered. As economic and market conditions change, it may prompt a need to realign an asset allocation to continue to strive for a certain return. Personal asset management begins with outlining goals and identifying how much risk an investor can handle in addition to the profits needed to achieve the desired results. It can be done with or without the help of a professional wealth manager.

Successful personal asset management could not only preserve an individual's assets, but it can also increase the total size of an investment portfolio. All of the resources used in asset management do not need to be directed in the financial markets as it may be prudent to keep some in cash. The more cash set aside in reserves, the more conservative an investment strategy because this money is not likely to be growing at any rate comparable to what can be achieved in the markets. Personal asset management may also extend to the creation of a legal trust so that any financial holdings may be distributed to beneficiaries according to an investor's preferences. An individual must hire a legal or financial representative to establish a trust.

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It is helpful to identify goals in the asset management process so that an investor knows when he or she achieves success. Whether saving for retirement or attempting to purchase a vacation home, recognizing some milestone will give direction to an asset management strategy. Also, an individual should recognize the type of risk that is acceptable in order to determine the most suitable ways to invest.

An individual who can afford to take excessive risk in the financial markets is more likely to adopt an aggressive personal asset management strategy. This may involve allocating assets to developing markets that carry a great deal of risk because of the unproven nature of these investments. The potential growth and returns in these exposures could surpass anything that might be earned in more traditional investments. In order to protect risky investments from potential losses, an investor can perform personal asset management by including some conservative exposures to a portfolio. This may include safe, government bond securities that provide steady income but that do not usually deliver excessive profits.

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