What are the Objectives of Portfolio Management?

OBJECTIVES OF PORTFOLIO MANAGEMENT : The basic objective of portfolio
management is to maximise yield and minimise risk. The other objectives are as follows :
(a) Stability of Income : An investor considers stability of income from his investment.
He also considers the stability of purchasing power of income.
(b) Capital Growth : Capital appreciation has become an important investment principle.
Investors seek growth stocks which provides a very large capital appreciation by way
of rights, bonus and appreciation in the market price of a share.
(c) Liquidity : An investment is a liquid asset. It can he converted into cash with the help
of a stock exchange. Investment should be liquid as well as marketable. The portfolio
should contain a planned proportion of high-grade and readily salable investment.
(d) Safety : Safety means protection for investment against loss under reasonably
variations. In order to provide safety, a careful review of economic and industry
trends is necessary. In other words, errors in portfolio are unavoidable and it requires
extensive diversification. Even investor wants that his basic amount of investment
should remain safe.
(e) Tax Incentives : Investors try to minimise their tax liabilities from the investments.
The portfolio manager has to keep a list of such investment avenues along with the
return risk, profile, tax implications, yields and other returns. An investment
programme without considering tax implications may be costly to the investor.