What Is Meant By Portfolio Optimization?Ĭhoosing a collection of assets based on their individual characteristics is just the beginning when it comes to portfolio optimization. A deliberate strategy ensures that you meet your financial goals while maximizing returns and minimizing risk. Of course, there is far more to portfolio optimization than expanding the number and type of holdings – referred to as diversification – without careful consideration. By optimizing your portfolio, you balance potential returns with the level of risk to ensure that a disaster with one of your holdings doesn’t leave you empty-handed. If something goes wrong, you could possibly lose everything. Putting all of your money into a single company, asset type, sector, or geographical region is risky. Portfolio optimization is a little like that. That’s because if something happens to the basket – it gets lost, falls, or meets with some other accident – you lose all of your eggs at once. Everyone has heard the old adage that it’s unwise to put all of your eggs in one basket.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |