Investment and Portfolio Management is the process of planning, strategizing, reviewing, analyzing, selecting, organizing, deciding, and ultimately controlling investment and financial assets and opportunities to align with an individual's investment goals.

What Is a Portfolio?

An investment portfolio refers to the blend of stocks, bonds, ETFs, cryptocurrencies, commodities, real estate, private investments, cash and cash equivalents, artwork, and any other assets an investor owns.

What Is the Goal of Portfolio Management?

Portfolio management aims to align the blend of assets an investor possesses with the individual's capacity for risk, time horizon, and financial goals. The goal of portfolio management is the same regardless of whether you decide to hire a professional or manage it yourself.

The Investment Portfolio Management Process

  • Identify the investor's objective: safety, income, or capital growth
  • Calculate potential returns and relevant risks
  • Determine asset allocations to optimize the risk-reward ratio
  • Formulate an investment strategy to align with the time horizon and risk profile
  • Research and analyze possible financial instruments to invest in
  • Track and monitor portfolio performance
  • Rebalance portfolio allocations as necessary

Types of Portfolio Management

  • Active Portfolio Management : Investors who implement an active approach to managing their portfolios buy and sell assets regularly to outperform a particular index fund's average return. Active investors enter stocks when deemed undervalued and sell them when the value increases.
  • Passive Portfolio Management : Passive investors focus on matching the market's average return by investing in ETFs or mutual funds. These investors subscribe to a set it and forget it long-term strategy.
  • Discretionary Portfolio Management : This management style involves the investor entrusting a hired portfolio manager to invest at their discretion on the investor's behalf based on the investor's goals and risk profile while giving the manager the authority to choose a suitable investment strategy.
  • Non-Discretionary Management : Under this management, investors consult financial experts to advise them on investment decisions. It is ultimately up to the investor to accept or reject the advice.

Factors Portfolio Managers Consider

  • Risks Tolerance : The level of risk an investor is willing to take.
  • Timeline : The amount of time the investor has to reach their goals.
  • Investment and Financial Goals : The objective the investor is trying to achieve. For example, investing for retirement, saving for a house, inheritance, college fund, etc.

Importance of Portfolio Management

Developing the habit of tracking and managing your portfolio is vital to achieving your financial goals. Periodically reviewing your investments may shine holes in your original strategy, offering the opportunity to shuffle funds into more lucrative assets or reduce previously unseen risks.

Hire a Professional vs. DIY Portfolio Management?

The idea of managing your investments yourself can be overwhelming to some. Portfolio managers and other financial experts exist because not everyone wants to spend all their time learning about investing. Some investors can't handle giving control of their investments to another individual, while others don't even want to think about it. Your personality, willingness to learn, dedication, and financial situation are critical considerations when determining whether you hire a portfolio manager or manage investments yourself.


Investment and Portfolio Management is a vital process that helps align an investor's portfolio to match their time horizon, investment goals, and risk tolerance. Whether you've decided to hire an investment advisor or manage your portfolio yourself, develop a habit of monitoring and reviewing your current investments to ensure they align with your goals.