30 May 2011

My Equity Portfolio Construction Process

Construct a portfolio is similar a way of creating a recipe for your own food. You may have your own taste which does not suit to others. Today I would like to share with you how I construct my investment portfolio which consists of various asset classes since I learn portfolio management from my finance course long time ago. It is easy to just buy and sell your investment product but it is not easy to construct your portfolio
to suit to your needs. Here, I show you how I do my own portfolio construction:

Steps by Steps:


1. Set an investment policy statement
  • Know your risk and return.
  • Know your investment horizon.
  • Know your restriction on anything. 

2. Stock screening
3. Stock purchase
  • Without opening a stock account, you cannot trade in stocks. Here shows you a list of stock brokers in Malaysia and in Singapore.What you need to do is to contact the brokers below. Of course, you may go to some roadshows and approach the people there. If you require better advice, I would recommend you to seek for advice from those remisiers who have experience in trading for long time. However, please note that you have to make your own decision of purchasing stock as you know yourself most.
4. Review and Portfolio Rebalancing 
  • Do your review on portfolio performance and do the portfolio rebalancing on regular basis. I would suggest you do a review at least half a year. By following the guideline you set on step 1 - Investment Policy Statement, you will be willing more comfortable and sleep well at night. 


22 comments:

  1. Are you looking at including bonds into your investment portfolio? Bonds provide some stability that can offset the volatility of stocks.

    ReplyDelete
  2. Hi,

    First of all, i have no big capital to allow me to invest in bond. although unit trusts give me that option, but I am weak in fixed income. That is why I only Invest in the asset classes that I am familiar with.

    Secondly, bond gives me no confident after the lehman brother issue. I do recognize the benefit of diversification, however I would like to try in real estate more as my risk appetite is bigger than normal investor.

    Thanks for your comment. ^^ maybe I will invest in preferred shares which risk & return characteristic is similar to bond.

    ReplyDelete
  3. hmmmm what got lehman brother down is not Bonds !!!!

    It is subprime mortgage!!!!

    ReplyDelete
  4. hay man pls read Intelligent Invest to know what are the different securities, the advantages and disadvantages.

    ReplyDelete
  5. Hihi,

    Thanks for correcting me. :) how many people will know lehman brothers is not bond but structured products before it collapsed? I can forsee there will be more high yield bond or so called junk bond get an AAA rating and becomes a so called a good fix income instruments to the public.

    Secondly, from intelligent investor, I can't tell much advantages and disadvantage of each asset classes. Most importantly is the person who invest in it. For example, a pilot could meet car accidents and a car racer might not be good in driving a train. So it all depends on the skills you have acquired. To be flank, I am not good in fixed income. But I knew that preferred shares is hybrid of both equity and fix income. :)

    Thanks for you pointing out :) Have a nice day.

    ReplyDelete
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