Choose the investment strategy according to the required portfolio return

At the same time, we can meet with recommended portfolio structures in investment bars and professional magazines, which are optimal for conservative and aggressive investors. Let’s take a closer look at this issue, including a detailed explanation of why this strategy is also suitable for a given type of investor.

First, let’s pay attention to investment strategies suitable for a short period. Since by the term “mole period” we mean a horizon of one year and five years, we can afford to tackle the term “strategy”, even if we do not contradict each other. For a horizon of less than a year, a term “investment tactics” would be appropriate.

For members of strategic studies, we use the classic assets: money market, bonds and stocks. We can divide stocks into conservative (where we would include relatively stable mature markets) and aggressive, which include stocks of small companies, internet stocks, or stocks of risky emerging markets. In practice, the number of td can be finely varied, but we must be careful not to end up with finely or according to absurd keys defined td.

Because in the Czech Republic there is a certain tradition of investing money in foreign currencies, we will take this weight into account. For simplicity, we will not pour out whether it is the US dollar, the euro and another so-called hard currency. The decision in which to invest in me would be the importance of a specific investment manager. Here the bag is only an illustrated example.

In total, we have five investments available – five bars, which are filled with a large number of individual securities. We will not examine in this city how to select individual securities. We will now focus exclusively on investments – we will not deal with specific shares, bonds or me yet.

In order to build a strategy from these five investments, we need to form an opinion on their returns and risks. We can take this opinion again about historical statistics, economic analysis – and end it intuition. Based on all these factors, we can, for example, estimate the benefits and risks contained in the following table.

Estimated benefits and risks from 1999
Type of investment Inputs (%) Risk (%)
Penn Market – K 4,00 1,00
Bonds – K 4,50 5,00
Shares – conservative 10,00 16,00
Actions – aggressive 12,00 22,00
Ciz mny 3,50 8,00

Very important note: the data contained in the table are for illustrative purposes only and may vary according to the conditions in the financial and capital markets.

The data contained in the table cannot be taken as an external truth. The expected benefits and risks may vary depending on market conditions. Money market and bond yields will depend on the current shape of the curve. Sometimes there can be a big difference between them, other times they will be the same. It may even happen that the expected bond yields will be less than the potential yields available on the money market.

Poznan from 2008

The expected income table would look somewhat different by the beginning of May 2008:

Estimated benefits and risks from 2008
Type of investment Inputs (%) Risk (%)
Penn Market – K 3,00 0,50
Bonds – K 3,50 3,00
Stocks – matured markets 9,50 16,50
Events – Central and Entrance Europe 11,50 18,00
Shares – BRIC and the like 12,00 24,00
Real estate fund 4,30 4,20

It doesn’t make much sense to me, so let’s not sweat with them like a separate class of assets. Conversely, we can divide “aggressive stocks” into Central and Eastern Europe (excluding Russia) and BRIC-type stocks (Brazil, Russia, India, na) and non-European emerging markets (Malaysia, Thailand, Mexico, Argentina, Jin Africa, etc.). In addition, there has been an opportunity to invest in real estate funds – they are in fact real estate funds, not real estate equity funds or Immofinanz shares.

In addition to returns and risks, the correlation between returns and risks of individual types of securities (or the connection between the return of securities and the market index, the so-called beta coefficient) also plays a role. Theoretical financial literature places great emphasis on the correlation of input. In practice, it turns out that the correlations and the beta coefficient are usually burdened by such a statistical error that they are unusable. Therefore, for simplicity, we will consider all beta coefficients used in optimized points to be proportional to risk (volatility). Let us make a dark error, but this error will be less, not if we rely on correlations of input and beta coefficients swept by the “textbook” method on the basis of historical time and input input.

A personal, subjective relationship with risk must not be reflected in estimates of the returns and risks of individual investments. The bag will appear the moment we choose the required return on our portfolio – because we require the return, so we have to take the risk. It is only at this point that it is time to move towards the core of an investment strategy: choosing the structure of the portfolio according to the type of investment. Here are some examples of different risky investment strategies for low inflation and high inflation risk. So to each financial poas.

Krtkodob investin strategie
Investin cl
Risk minimization Compromise between inputs and risks Maximize input
Low risk of inflation Concervative strategy Vyven strategy Aggressive strategy
High risk of inflation “Circles Defense” “Poclusem job” “Sprint”

Concervative strategy

As part of this strategy, we do not require a positive return – we can only minimize the fluctuations in the value of our portfolio. Therefore, it is probably not surprising that conservative strategies have an absolute emphasis on money market instruments. In the conditions of 2008, as an optimally conservative portfolio for the short term, 100% of the money market instrument is based. Zero bond content is due to low years rates.

This strategy, however tedious and infrequent, may be optimal for a known number of clients. In cases such as “mm pension, which I will need to pay the tax for a year,” there is even no admissible strategy other than this ultraconservative approach.

ryvek is from the book
Investin strategy for tet tiscilet

vydan nakladatelstvm City Publishing,
You can find more information at

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