Investment Objectives by Dr Edgar Paltzer
Investment Objectives Explained Investment objectives are used to determine the overall strategy for an investment portfolio. By creating a set of specific goals for a portfolio, investors or their investment managers can determine what the optimal strategy will be to deliver the desired results. 2
Questionnaires Investment management services will generally require clients to fill out a comprehensive questionnaire, looking at what they hope to achieve in the short-term, medium-term and long-term with their investments. This questionnaire will also help determine the investor’s tolerance for risk. Investment objectives can then be created based on the combination of time horizon and risk tolerance as determined by the questionnaire.
Tailored Portfolios Once the investment objective has been set, investment managers can begin creating a diversified investment portfolio that is tailored to meet the needs of the client. Those who are interested in saving their money and generating regular income and capital preserva-
tion will have a portfolio that focuses mainly on low-risk assets such as securities that will protect capital against loss, while those with long-term goals and a higher capacity for risk will have a more aggressive portfolio containing a higher percentage of stocks and derivative instruments with a trading or hold strategy.
Once the investment objective has been set, investment managers can begin creating a diversified investment portfolio that is tailored to meet the needs of the client.
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You can read about the difference between wealth management services and private banking by visiting the blog of Dr Edgar Paltzer.