FORMATION AND MANAGEMENT OF A PORTFOLIO OF FINANCIAL INVESTMENTS
Journal Title: Держава та регіони. Серія: Економіка та підприємництво - Year 2018, Vol 2, Issue 101
Abstract
In this article, the essence of investments is disclosed in their varieties. There are two types of investors who operate in financial markets (individual and institutional investors). They can use both direct (direct use of financial markets) and indirect (buying financial instruments from financial intermediaries) way of investing. Each investment instrument is characterized by a certain level of profitability and risk. The main types of financial instruments are: – Short-term investment vehicles – Securities with fixed income – Shares – Speculative investment instruments – Other investment instruments The essence of portfolio investment is the investment of funds in securities (stocks, bonds) in order to profit. There are different types of investment portfolios. They are classified according to the source of income and the degree of risk. Depending on the source of income, portfolios are divided into growth portfolios and income portfolios. Portfolios of growth are formed from securities, the cost of which grows. The purpose of creating this portfolio is the growth of its value. The income portfolio is focused on obtaining high current income – interest on bonds and dividends on shares. If you consider types of investment portfolios depending on the degree of risk acceptable to the investor, then you must consider the types of investors. Typically, investors are divided into conservative, moderately aggressive, aggressive ones. There are two ways to manage portfolios: active and passive control. The main principles of building an investment portfolio are: – The principle of security. – The principle of achieving an investor-eligible return – The principle of achieving minimum risk – The principle of diversification. – The principle of liquidity. There are a fairly large number of investment strategies, we highlight the most popular. – Fundamental analysis. – Investment in growth. – Technical analysis. – The strategy “buy and hold.” During the research, it was identified a few major mistakes that investors admitted when making investment decisions: 1. Lack of a clear plan. 2. Too much attention to financial media. 3. Use of sums of money that the investor cannot afford to lose. 4. The purchase of assets in the past showed the best results. 5. Not understanding what you invest in. 6. Investing in one or similar assets. 7. Follow the crowd.
Authors and Affiliations
O. V. Mykhailenko, V. O. Remeniuk
Keywords
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