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What is Individual Portfolio Management?

Jim B.
Jim B.

Individual portfolio management refers to the practice of individual investors seeking professional counseling to determine what investments to make as part of their overall portfolio. Investment firms offer this service for a fee to benefit those people who might not have the experience necessary to construct a solid portfolio. The goals of individual portfolio management depend upon the investor's needs and desires for the capital he or she has to invest. Risk management is also a huge part of this process, as portfolio managers look for ways to offer potential growth to investors without putting too much of their capital at risk.

The sheer scope of investment opportunities available to investors may be too complicated for many people. As a matter of fact, even experienced investors may consult professional help when constructing their investment portfolio, simply because of what is at stake. Many people use investing as a way of providing for themselves and their loved ones, not just for the current time but also for a time in the future when income may be otherwise hard to achieve. For all of those reasons, good individual portfolio management is a service that is usually in high demand.

Individual portfolio management takes into account the needs of the customer.
Individual portfolio management takes into account the needs of the customer.

Part of the reason that individual portfolio management is necessary is that there are so many investment possibilities open to people willing to take the plunge. When many people think about investing, they often automatically think of the market for stocks and bonds. But that is only part of the picture. Others invest in real estate, art, commodities, and many other assets that have the potential to grow in value over time. Portfolio managers can help investors navigate all of these choices.

Investors have to accurately communicate the desires they have for their investment capital for individual portfolio management to be successful. If an investor is looking for big gains in the short term, a portfolio manager might want to seek out stocks of companies currently undervalued by the market. On the other hand, an investor might wish to use investing to build a nest egg for retirement. In that case, a portfolio manager can get the investor involved in long-term financial instruments, like bonds, that promise steady income.

Risk management is also a huge part of individual portfolio management. No investor wants to see his capital disappear, but different investors have disparate comfort levels in terms of the risk which they can accept. Diversification, which occurs through investments in multiple securities spread across the investment landscape, is a common method of lessening risk. But risk can never be completely eliminated from investing, so portfolio managers again have to understand the wishes of their clients when it comes to risk exposure.

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    • Individual portfolio management takes into account the needs of the customer.
      By: Anna
      Individual portfolio management takes into account the needs of the customer.