Managing your own investment portfolio doesn’t have to be complicated. No matter how much money or investments you have, there’s a level of portfolio management that’s right for you. Our experts at OWLFI have years of investment management. We actively manage our client’s portfolios and investments uniquely tailored to their strategic plans.

Below, we’ll provide an in-depth guide to investment portfolio management, including explaining active and passive portfolio management, standard terms used within the industry, and how to manage your own portfolio.

What is portfolio management?

Portfolio management is the process of selecting and overseeing investments that meet the long-term financial objectives of a client or company. Typical investments include stocks, bonds, mutual funds, real estate, and cryptocurrency.

Understanding investment portfolio management

With portfolio management, you can either hire a professional licensed portfolio manager to work on your behalf or build and manage your portfolio yourself. Either way, the goal is to maximize your investments’ expected return with little risk.

Investment portfolio management can either be active or passive.

• Active portfolio management: Managers take a hands-on approach when making investment decisions. This includes actively buying and selling stocks and other assets.
• Passive portfolio management: Managers pursue a long-term strategy that may involve investing in one or more exchange-traded (EFT) index funds.

Things to keep in mind with investment portfolio management

There’s more to portfolio management than building and managing investments. Here are a few concepts to keep in mind to help you invest and manage wisely.

• Asset location: This is a tax-minimization strategy that takes advantage of different types of investments to get different tax treatments.
• Asset allocation: This refers to how your portfolio is divided between your investments.
• Diversification: This involves spreading your investments across multiple industries, companies, and geographies. Managers recommend diversification because if one industry sinks, your whole portfolio does not.
• Rebalancing: This is used by managers to return a portfolio to its target allocation at regular intervals. It’s usually done annually to get the portfolio back on track to its original goals.
• Tax minimization: This is the process of figuring out how to pay fewer taxes. It’s mainly done to work or offset an investor’s exposure to current and future taxes.

How to manage your own investment portfolio

If you decide to manage your portfolio on your own, there are a few things to keep in mind.

1. Set goals for your portfolio. How much money do you want to invest? Once you know, you can start saving and create an investment strategy to meet your objectives.
2. Determine if you want outside help. You can manage your investments by yourself or bring in outside help. Portfolio managers can be costly, but they typically offer a customized portfolio and help with financial planning.
3. Create a timeline. How long do you want to keep your money invested? You may decide to invest it for one year or five, the choice is up to you.
4. Look at the risks. Investing comes with risks, including losing your money. You’ll need to decide how much you want to diversify your portfolio or not at all.

Speak with an OWLFI investment specialist today!

We established OWLFI after watching clients suffer financially from a disconnect between their financial advisors, CPAs, and estate planning attorneys. Bringing all of these professions together into one fully integrated business allows our clients to navigate retirement with less stress and more confidence.

Call or email our team to learn how our tax specialists can help you with investment portfolio management.