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Posted: January 31st, 2022
Personal Investment
Personal Investment
Personal investment involves parting with individual finances to be used by another user of a fund, party, or for a productive purpose. It also involves offering an advance, loan, or participating in the debts or equity capital of e non-corporate or corporate business unit. A personal investment policy statement is essential to an individual in providing general investment objectives and goals of investment. Besides, it illustrates the best strategy that should be used to meet the set objectives. This paper outlines my general investment goals and objectives and describes the strategies I should employ to meet these objectives.
The main objective of my investment is to achieve long-term growth and capital preservation. Thus, to meet the investment’s set goals, investment safety will be ensured through diversifying to different businesses. The diversification will help reduce the risk to a minimum level. Passive and low-cost investment solutions will be employed where prudent and available. Besides, the investment will be based on five years and above the time horizon (“Tips To Navigate …”, n.d.). The asset allocation will also be based on this long-term term outlook. There will be no short-term liquidity needed. I understand there is a chance of losing capital during the investment period. Therefore, adhering to the investment strategy in all the market conditions, particularly in market unpredictability, is essential in meeting the set objectives because time is an essential asset for investing. Also, to achieve the main set goals, risk will be highly minimized through diversification into other businesses.
My investments risk tolerance score is between fifteen and eighteen percent every year in the worst-case situation. Because of the high amount of capital being invested and the long-time horizon, risk expectations are also high, therefore, putting the investment at a higher risk. A diversification strategy will help the business minimize risks, giving it a higher tolerance for risks (“The Guide to …”, 2021). Finally, to achieve the set objective for the investment, the asset allocation strategy must be followed. That includes international developed equity, U.S equity, domestic real estate, investment-grade bond, and emerging market equity. Various investments will be evaluated to determine the possible risk each one poses before venturing into a business.
One strategy to help achieve investment objectives and goals and maintain a long-term investment is diversifying. Diversification improves the investment profits at any level an individual chose to target (“The Guide to …”, 2021). Venturing into many different investments to help mitigate risks that may arise in the market. I will look for investments (cash, bonds, or others) whose profits have not historically moved in a similar degree and direction while creating a diversified portfolio. In this manner, even if a segment of the portfolio is decreasing, the remaining are still likely to be improving or will not be declining as much. Investors need to seek active strategy to meet the set objectives of the investment (Rowley, Walker, & Zhu, 2019). Also, proper investment control and monitoring procedures will be established to reduce unnecessary losses and risks. For instance, monthly statements shall be provided by every employee. The statement will show values for every asset as well as the transactions influencing assets within the investment. Besides, all the withdrawals end deposit requests must be thoroughly evaluated. Internal documents for withdrawal and deposit procedures must be developed.
In conclusion, personal investment involves putting finance in other productive activities. Before investing, I develop personal investment policy statement which has all the objective and goals of the investment and the strategies that will help achieve the goals. There is some factor which I will put into consideration before venturing into an investment. The primary strategy that can be used to achieve the set investment goals is to diversify in different investments. Similarly, enhanced investment control and monitoring procedures will be established.
References
Fidelity Investments. (2021, January 03). The Guide to Diversification. Retrieved April 21, 2021, from Fidelity Investments: https://www.fidelity.com/viewpoints/investing-ideas/guide-to-diversification
Fidelity Investments. (n.d.). Tips To Navigate Volatile Markets. Retrieved April 22, 2021, from Fidelity Investments: https://www.fidelity.com/viewpoints/investing-ideas/six-tips
Rowley, J. J., Walker, D. J., & Zhu, C. (2019). The Case for Low-cost Index-fund Investing. Vanguard Research.
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