How to Choose an Investment Objective | Ally (2024)

FAQs

How to Choose an Investment Objective | Ally? ›

Generally speaking, investment objectives span a spectrum with “Income” investors generally having portfolios that emphasize current income and “Growth” investors having portfolios that emphasize capital appreciation with minimal consideration for current income.

Generally speaking, investment objectives span a spectrum with “Income” investors generally having portfolios that emphasize current income and “Growth” investors having portfolios that emphasize capital appreciation with minimal consideration for current income.

An individual's investment objective defines investing ideas to support the achievement of an individual's financial goals. This aim is often centered on one of four techniques: income, growth and income, growth, or trading. An investor's time horizon and risk tolerance influence an investing objective.

Following are some of the primary objectives of investment: To Keep Funds Safe & Secure. To Grow Your Funds Exponentially. To Earn a Steady & Additional Source of Income.

Retirement. Retirement should always be the first investing goal on your list. But if you've got that covered, you probably have a bunch of other goals you want to reach.

What Is the Optimal Portfolio? An optimal portfolio is one designed with a perfect balance of risk and return. The optimal portfolio looks to balance securities that offer the greatest possible returns with acceptable risk or the securities with the lowest risk given a certain return.

An investment objective is a set of goals that determines an investor's financial portfolio. A financial advisor determines the optimal strategy for achieving the client's goals using an investment objective. An investor's risk tolerance and time horizon help in determining an investment objective.

What is a portfolio objective? ›

Objectives of Portfolio Management

The fundamental objective of portfolio management is to help select best investment options as per one's income, age, time horizon and risk appetite. Some of the core objectives of portfolio management are as follows – Capital appreciation. Maximising returns on investment.

3.1 Return Objectives

For example, a client wants to achieve a return of 9% or inflation-adjusted (real) return of 2%. The objective is to deliver a positive return over time, irrespective of how good or bad the market performance is. No index or benchmark is used to measure the performance.

The focus of aggressive investing is capital appreciation instead of capital preservation or generating regular cash flows. A standard example of an aggressive strategy compared to a conservative strategy would be the 80/20 portfolio compared to a 60/40 portfolio.

The Rule of 120 (previously known as the Rule of 100) says that subtracting your age from 120 will give you an idea of the weight percentage for equities in your portfolio.

Amount: Aim to save at least 15% of pre-tax income each year toward retirement. Account: Take advantage of 401(k)s, 403(b)s, HSAs, and IRAs for tax-deferred or tax-free growth potential. Asset mix: Investors with a longer investment horizon should have a significant, broadly diversified exposure to stocks.

When selecting objectives, ensure they are specific, measurable, achievable, realistic and have a time frame. The most important aspect of identifying objectives is ensuring that they are achievable through the program.

The aim of investment analysis is to determine how an investment is likely to perform and how suitable it is for a particular investor.

Safety, growth, and income are the primary objectives of an investor. Liquidity and Tax Savings are the secondary objectives of an investor.