Archive for June 21st, 2008

Sequence of investment actions

Posted on June 21st, 2008 by admin, under Sequence of investments.

When investing serious amounts of money on stocks it makes sense to work out a plan of investing. We need to define the aims of investing on stocks – terms and sizes of investments, what risk is acceptable in the process of investing, expected profits. Then you can try to pick up suitable instruments for investing on stocks.

It is necessary to estimate financial instruments in terms correlation of profitability and risk - we can do this only after detailed consideration of types of instruments.

In order to reduce the risk of any adverse events associated with specific financial instrument (bankruptcy of company, defolt of the state etc.) we must strive to diversify investments – aim to invest in different markets, different industries, different companies. These attachments will make the “diversified portfolio”. Once your portfolio is formed, it is necessary to “manage the portfolio”. This means withdraw from portfolio investments that didn’t show planned profit, or instruments that didn’t meet expectations, with the acquisition of potentially profitable instruments instead.

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