Define Portfolio management, the portfolio is a collection of investment instruments like shares, mutual funds, bonds, FDR and other cash equivalents, etc. Portfolio management is the art of selecting the right investment tools in the right proportion to generate optimum returns with a balance of risk from the investment made
Objectives of Portfolio Management
Capital growth is the increase in value of an asset over time. The asset may be a physical object, such as a piece of real estate, or a financial asset, such as a stock or bond. Capital growth can be positive or negative, depending on whether the asset’s value increases or decreases.
Security of Principal Amount Invested
Fixed deposits offer higher interest rates than savings accounts. For instance, the rate of interest on fixed deposits is between 5% and 7% whereas the rate of interest on savings accounts is between 2% and 3% . But it is not fixed in the world, the rate is floating in many countries.
Define Portfolio management is based on institution liquidity statues. Since we want to trade profitably, it is important that we have a certain amount of liquidity in the market. The liquidity of a market is the amount of money available in the market for trading.
There are two types of liquidity:
1. Market liquidity.
2. Order liquidity.
Market liquidity is the amount of money available in the market for trading.
Order liquidity is the amount of money available in the market for your order.
Marketability of Securities Invested in
Securities must have market value. If a security have not marketability it will not provide any output when needed. Good security must contain marketability.
Diversification of Risk
A combination of investments that are not all subject to the same risks. Many investors seek to reduce risk by investing in a variety of investments. This technique is often used to protect against a sharp decrease in the value of a single investment.
Part of being a good investor is being consistent with your returns. Many investors will enjoy several months of returns, followed by three months of losses. Consistent returns are more important than sizable returns. Many people want to be risk-takers and enjoy the thrill of high returns. The truth is that risk-taking is a major source of financial losses. It’s important to keep in mind that losses are more painful than gains.
Tax Planning Tax planning is a process in which businesses and individuals can minimize their tax liability by taking advantage of the tax law’s many provisions and opportunities. Tax planning can be used to reduce income taxes, estate taxes, gift taxes, and property taxes. The tax planning process begins with an understanding of the taxpayer’s current financial situation and tax liabilities. The taxpayer then identifies opportunities to minimize taxes through the use of deductions, credits, and other tax breaks. The taxpayer then implements the tax plan by taking action to reduce taxes. There are many different tax planning strategies that can be used to reduce taxes. Some of the most common strategies include: Making charitable donations Using retirement accounts to shelter income Investing in tax-advantaged accounts Deferring income Accelerating deductions Claiming tax credits Making energy-efficient home improvements Tax planning is an important part of financial planning for both businesses and individuals. By taking advantage of the many tax breaks and opportunities available, taxpayers can save money and reduce their tax liabilities.
Role and responsibility of branch manager In borrower selection
1.Approve loans within specified limits, and refer loan applications outside those limits to management for approval.
2) Meet with applicants to obtain information for loan applications and to answer questions about the process.
3) Analyze applicants’ financial status, credit, and property evaluations to determine feasibility of granting loans.
4) Explain to customers the different types of loans and credit options that are available, as well as the terms of those services.
5) Obtain and compile copies of loan applicants’ credit histories, corporate financial statements, and other financial information.
6) Review and update credit and loan files.
7) Review loan agreements to ensure that they are complete and accurate according to policy.
8) Compute payment schedules.
9) Stay abreast of new types of loans and other financial services and products in order to better meet customers’ needs.
10) Submit applications to credit analysts for verification and recommendation.
11) Handle customer complaints and take appropriate action to resolve them.
12) Work with clients to identify their financial goals and to find ways of reaching those goals.
13) Confer with underwriters to aid in resolving mortgage application problems.
14) Negotiate payment arrangements with customers who have delinquent loans.
16) Supervise loan personnel.
17) Set credit policies, credit lines, procedures and standards in conjunction with senior managers.
18) Provide special services such as investment banking for clients with more specialized needs.
19) Analyze potential loan markets and develop referral networks in order to locate prospects for loans.
20) Prepare reports to send to customers whose accounts are delinquent, and forward irreconcilable accounts for collector action.
21) Arrange for maintenance and liquidation of delinquent properties.
22) Interview, hire, and train new employees.
23) Petition courts to transfer titles and deeds of collateral to banks.
Define Portfolio management is easy, there are a few key things that a branch manager should look for when choosing borrowers. First, the manager should make sure that the borrower has a good credit score. Second, the manager should make sure that the borrower has a steady income. Third, the manager should make sure that the borrower has a good employment history. fourth, the manager should make sure that the borrower has a good down payment.