Portfolio Investment: Case Ace Explainer

By – Garima Sortey

Portfolio investment in investment in stocks, assets, etc with an expectation of increased returns in the future. It not only includes assets but even investment in mutual funds and real estate.

It is in the form of a group (portfolio) of assets, including transactions in equity, securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures.

Customers do not invest without considering a plethora of things that include better returns, safety, security, and many other factors that influence their decision for future consideration.

Investing money or capital budgeting is more or less the same thing in the business world. They want to invest their money in such a way that they get maximum returns and revenue.

Types of portfolio:

  • Growth Portfolio: It is primarily regarding increasing the growth of the investor aiming for higher potential rewards by taking risks. This includes investment in younger companies that have huge potential to grow.
  • Income Portfolio: It is more inclined towards getting a regular income from the investment sources and aims to create safer and long-term passive income sources.
  • Value Portfolio: This portfolio is based on buying cheap assets by valuations in the market and taking benefits.

Expectations/considerations of customers while investing:

  • Getting good returns: Customers cannot compromise on efficient and cost-effective returns.
  • Safety and Security: Customers want their money to be safely secured.
  • Liquidity: It’s one of the prime factors whether the investment is liquefiable or not.
  • Tax Benefits: Many investments have tax benefits under Income Tax.
  • Minimum Risk/Risk-free: Many times discourage a potential investor to invest. However, the more the risk-taking capacity the better the returns. 
  • Legality: Various factors whether the investment is legal in terms of law and not an illegal deed.
  • Passive Income: It’s often said that to get better returns and enjoy retirement early one must increase their passive income sources; wherein they invest once and keep on getting returns.
  • Flexibility: The investment must provide flexibility to the customer. 
  • Diversification: This also encourages customers to invest whether the investment can be further diversified into other investment categories or not.
  • Hedge against inflation: Investments like Gold are a hedge against inflation and any investment is considered good if the returns on it are more than the inflation rates in the economy.
  • Brand Value: The greater the brand value of the company, stocks, banks, etc is the more the investor is assured of the investment and hence trusts it.
  • Less paperwork/ red-tapism: Red Tapism and more paperwork discourage customers from investing. Less and less paperwork attracts customers.
  • Transparency: No vital information should be hidden from the customers and it should be made transparent.
  • Ownership: When a customer invests in shares they get certain ownership for the number of shares that they have invested.
  • Regular updates: It’s imperative to get regular updates and information regarding the investment via calls, messages, emails, etc.
  • Backed by central government: Any investment that is backed by the central government like in the case of banks like State Bank Of India gives quality customer assurance and increases the goodwill of the investment.
  • Partial Withdrawal: When customers can withdraw partially; it gives them a certain amount of flexibility that encourages them to invest because it would not make it a mandate for them to wait for the entire investment to mature and they can even withdraw partially.
  • Terms and conditions easy to understand: The terms and conditions should be crystal clear and made easy for the customers and nothing should be hidden in twists.
  • User friendly: When the investment is user-friendly; it encourages more investment because it need not be very technical or in a jargon sense difficult for any age group to understand, especially the older.
  • Ownership transferability: The transferability of ownership is considered while investing so that if an investor wishes to sell the investment to the potential investors it isn’t a difficulty.
  • All Modes of payment should be accepted: This factor cannot be taken for granted; it encourages more investment because it doesn’t have a barrier.

Portfolio Management: It is managing the portfolio or selecting a portfolio that meets the expectations and demands of the client and meets their long-term investment expectations with minimum risk.

Conclusion: There are certain parameters that not only help in understanding the requirements of the potential investors but also help in forming a deeper understanding of what a good investment implies and try creating such investment opportunities for the clients that meet the expectations discussed above. 




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