Investment management can be seen as controlling and making rational decisions regarding investment of a person,companies and other institution.Many people can decide to have a personal investment like building houses and leasing them out or selling them(real estate) or might have shares in banks and other financial institutions may propose to manage their investments all by themselves,or use a investment manager in any Investment companies and firms.
It Is the work of the investment manager to guide investments for people,companies,and some other large financial organisation and institutions,some large companies also put their investments in care of a investment manager,this investment manager may be a person of a company.
Companies regards investment management very essential because investment helps to expand their businesses,companies who want to make sales or have profit might pay for advertisment either on radio, television and other social media platforms,when the awareness is made known to public,it will enhance their productivity since people or end users comes for their goods and services.
Private individuals with large investment and good investment services are called wealth management because they invested to increase their wealth,when companies like banks, Insurance companies manages investment it is know as found management.
There are Many risks as regards investment but the investment manager is a skilled person that knows how to control all the risk one might want to encounter in aspect of investment.when an investment officer or manager is approached by an individual or an investor,the manager will have to access the current networth and all belonging owned which is Assets and all the liabilities such as debt,he also access how cash flow of the investor,after this he create a financial profile and he will work hand in hand with his investor to know the percentage of wealth that would be returned to the investor after years of investing and also take risks that are considered appropriate for such business or investment.The aim of all these is to allow the manager and investor reach their ultimate goal which is to make profit.
RISKS IN INVESTMENT
Let’s consider you have #10,000 of cash available and you are interested in investing it. Let say you are intrested in investing the money for a year Like any rational investor, you expect the final amount in a year’s time to be higher than the #10,000 amount you want to invest. The last thing you want is to lose the #10,000 you started your investment with. Thus, the main point to note is that there exists a risk-return in trade-off. As a potential investor, your sole aim should be to invest in the less risky investment option or plan that will yields the highest profits. Let me expatriate on this, it is important to realize is that there is a tradeoff between risk and return. If an investor is expecting to invest in a more risky investment option than the risk-free rate then he/she is likely to earn more in return. This is meant to compensate for the risk that the investor is taking. So far, it all makes sense! An investor might be willing to take more risk because he or she wants to earn more money in return. It is important to note that higher risk does not produce higher An investor needs to be aware of the unforeseen changes in the factors and there is need to understand how they can impact the risk premiums and asset return. An investor needs to be aware of the unpredictable changes in the factors and needs to understand how they can impact the risk premiums and asset return. Now that we’ve acquainted ourselves with the details on the risks involvement in investment management, let’s now delve into the principles of investment management.
PRINCIPLES
Don’t be worried with about your exposure to an asset is instead, focus on the exposure to the underlying factor also Group the assets into factors. This means that your portfolio can contain lot of assets like hundreds but dependent on the asset types, the assets can be grouped into a handful of factors. Now the major thing is that some of the assets themselves are the factors such as equities, whereas some of the assets can contain multiple factors such as a corporate bond asset can contain interest rate to counterparty default risk factors.
Not all investors have the same risk exposure profile, some people are not really interested into taking high risk and each investor can have different optimal exposures to the risk factors.
ADVANTAGES
Low inflation encourages high earnings
Friendly government policies on goods and services increases investors desire and willingness to invest.
Investors stands a chance of gaining high returns, when the economic outlook is positive,
there is liquidity in the market, when the inflation rate is low and there is a good balance of supply and demand in the market.
DISADVANTAGES
There are many inefficiencies in the market in investment market, there is a cost associated with buying and selling of an asset. For an instance, an investor might have to pay a transaction, agency, financing cost.
Inflation in the global economy or market after an investment is made can cause low income of profit.
Natural disasters like heavy flood or earthquake can cause a tremendous damage over an invested land.
It can be concluded that Investment management is money management that includes budgeting,scale of preferences,banking.One thing one must consider before investing is to take a risk, their no success without a Risk.Investment management,many company who are into it have a risk management system to help their customers or clients to Manage their profit or loss, some Advantages and disadvantage of Investment has been mentioned above and it can be said that taking risk for a business is worth it.
Take risk today and be financially stable.
