Personal Finances Management example

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Personal Finances Management

Chapter 1: Managing Personal Finances

Introduction and Rational

The investment report provides the investment strategy and philosophy behind it that aims to maximize the risk-adjusted returns. The fund is worth 1 million Qatari dinars. The funds are distributed among variety of securities to comply with the investment strategy and generate superior risk-adjusted returns. The objective of the report is to construct a balanced investment portfolio using both fundamental and technical analysis of financial markets. The report is based on the investment strategy. It is based on four pillars – fundamental analysis, technical analysis international diversification and risk management. The report consists of three chapters. The first chapter provide general background of the investment strategy and rational behind. In addition, the chapter also provides asset distribution among different asset classes and securities. A second chapter is dedicated to investment portfolio. It provides the portfolio description with all relevant data and results. The chapter also explains the logic behind investments in the chosen asset classes and securities. A third chapter relates to portfolio evaluation and comparison with the investment goals. This chapter concludes whether the strategy achieved the set objectives.

Investment Goals, Objectives and Philosophy

The main investment objective is to beat the Qatari market and generate the superior risk-adjusted rate of return on investments compared to the general stock market index. The key goal is to construct the balanced portfolio that meets both objectives – higher rate of return and relatively low risk. The strategy complies with the balanced approach to investing. The portfolio relies on diversification across asset classes and securities to provide investors with a higher risk-adjusted returns. The investment philosophy is based on the mix of fundamental and technical analysis. The strategy relies heavily on portfolio diversification, international diversification and the trend-following approach to technical analysis. It combines both passive asset management though ETFs and active portfolio management by investing in fundamentally and technically strong securities that tend to boost the portfolio’s risk-adjusted returns.

Portfolio Allocation

Table-1 shows the percentage distribution among asset classes of the investment portfolio. The portfolio invests in a number of asset classes – equities (both domestic and international), fixed income (international bonds), precious metals and other metal commodities, bank deposits and foreign exchange market (currencies). As it is seen, the main asset class is equity. A half of the portfolio is invested in equity securities. The equities include largely international indices and managed through ETFs. 20% of the equity investments relate to the Qatari market index. The rest is equally spread between US S&P 500 index and World Stock Index MSCI excluding the US. International bonds are the second largest asset class of the portfolio. As it is seen from Table-1, 20% of the total investment value is put into the international bond index. About 15% of the portfolio is invested into …

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