At its core, the process begins with setting clear financial goals and objectives, taking into account factors like risk tolerance, time horizon, and liquidity needs. The next level involves crafting an asset allocation strategy, deciding how to distribute investments among different asset classes such as stocks, bonds, and real estate. Then, portfolio construction comes into play, where specific investments are selected to create a diversified and well-balanced portfolio. Risk management is another critical aspect, ensuring that potential losses are mitigated, and diversification helps spread risk.
Regular monitoring and rebalancing complete the cycle, as the investment plan evolves with changing circumstances and market conditions. These fundamental levels provide a structured approach to investment management planning, helping individuals and institutions work towards their financial objectives while managing risk effectively.
