What is a Portfolio Plan?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 17 January 2020
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A portfolio plan is a structured strategy to manage the assets within a portfolio in a manner that allows the highest return possible to be achieved. Plans of this type involve the use of carefully planned management of all assets within the portfolio, as well as managing the overall impact of each asset on the cumulative value of the portfolio itself. To this end, a portfolio plan will consider the current state of the portfolio, the projected movement of the assets contained within the portfolio, and how that projected movement fits with the financial goals of the owner of the portfolio.

There are a number of different ways to design a portfolio plan. Strictly speaking, there is no one right way to go about creating a plan. The investor may choose to utilize a modern portfolio theory of some sort, focus the construction with specific types of investments that he or she knows well and is comfortable with, or use a dynamic approach that involves trying a multiplicity of strategies in order to determine what does and does not work. Plans may be extremely rigid, or be somewhat flexible, allowing an investor to take advantage of changing economic conditions to increase portfolio value.


What is important is that the portfolio plan help the investor in the pursuit of his or her financial goals. If the idea is to create a portfolio containing securities that will help generate a nest egg for retirement, then the selection of holdings will often include securities that are anticipated to produce a consistent return over the long-term. Should the investor wish to use the portfolio to generate revenue for an upcoming project of some sort, the focus may be on investments that carry a higher degree of risk, but are likely to produce a high yield in a short period of time. Understanding what the investor wants to accomplish will always make designing a plan for investing a much easier task.

Corporations as well as individual investors usually adopt and follow some sort of portfolio plan. In both instances, there is a good chance that the investing strategies used will change from time to time. This can be based on the emergence of new opportunities that are more likely to produce the desired results, shifts in the fortunes of the businesses that issue the securities, or even changes in the personal goals of the investor. For this reason, a portfolio plan should never be viewed as a permanent approach that cannot be adapted to meet new circumstances.



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