How to begin Investment with proper risk management? Finance/Non-Finance

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How to build your investment portfolio? What is the role of diversification in portfolio risk management..
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Very Nice saying !
"Don't put all your eggs in one basket". 

The First thought when we look for an investment that comes to our mind. How to build our portfolio? An ideal portfolio should be a kind of portfolio which does not affect too much with the market volatility.  And which can only be possible with the help of a good diversified portfolio.

The very first question which we will ask to ourselves before an investment is, What is our risk appetite?
1) Risk Lover- Equity Focused ( High Return)
2) Risk Moderate - Equity and Debt Focused  (Moderate Return)
3) Risk Averse - Debt Focused (Low return)

The Debt market is not so popular and widely used. So for now we skip and jump to the equity market i.e one of the largest markets in the world. Now let us understand how we can build a strong portfolio with the help of only the "equity investment" for all kinds of risk appetites.

1) Risk lover -
Industry (Combination): Growth Industry 60% and Cyclical Industry 40%
Beta  / Volatility            : High Beta Stocks (Beta >1)
Market Capitalisation   : Mid Cap 60%  and Small Cap 40%

2) Risk Moderate - 
Industry (Combination): Cyclic Growth Industry 40% and Defensive Industry 60%
Beta  / Volatility            : Median Beta Stocks (1.0 >Beta > 0.50)
Market Capitalisation   : Mid Cap 50%  and Large Cap 50%

3) Risk Averse - 
Industry (Combination): Defensive Industry 70% Cyclical Industry 30%
Beta  / Volatility            : Low Beta Stocks (0.00 >Beta > 0.50)
Market Capitalisation   : Mid Cap 20%  and Large Cap 80%



How to Build a portfolio with equity investment.









 

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