What Is The Interior Decorating Approach to Construction of Portfolio?

Interior Decorating Approach to Construction of Portfolio: Interior decorating approach is tailor-made to the investment objectives and the constraints of each investor. In case of exterior building or room structure, the furnishing and interior decoration to be carried out inside the structure will depend upon the purpose for which it is to be used. Similarly, portfolio will consist of securities which will suit the individual’s investment objectives and constraints. An individual investor has to carefully develop his portfolio over a period of years to suit his needs and match his investments objectives. A serious minded investor

will have to consider the following important categories of investment opportunities.

• Protective investments: These investments protect the investors against the uncertainties in life. The life insurance policy is a good example of this type of investment opportunity.

• Tax oriented investment: some investments provide tax incentives to the investors. For example, public provident fund, national saving certificate.

• Fixed income investment: These investments yield a fixed rate of return on investment. For example, investment in preference shares, debentures, bank deposits, etc.

• Emotional investment: These investments are made for the purpose of emotional securities and satisfaction. Investors get some satisfaction from these investments. For example, house property, jewellery, household, appliances etc.

• Speculative investment: These investments are made for the purpose of speculation. The motive behind it is to make quick gains out of fluctuations in the markets. For example, investment in real estate, shares, commodity trade etc.

• Growth investments: These investments are made for the purpose of earning capital These are not made forgetting regular income. For example, investment in growth shares, real estate, land, gold etc.

With the help of these varieties of investments, we can attempt to develop a matrix for matching the individual characteristics of specific investment so that a suitable portfolio can be developed for each investor. In real life, building up good portfolios a simple thing. A young who may have a lot of insurance and considerable growth portfolio should add some real estate by the time it reaches the midstream. At the middle-age sets, the investors should avoid making risky and speculative investments. They should make the necessary emotional investments which will provide security and mental peace in old age. When they are on the verge of retirement and even during retirement their portfolio should preferably consist of safe and income generating investments.