FINANCE

Finance

Finance

Before you make even one investment, you must conclude on your optimal investment strategy. Two very distinct strategies are active portfolio management and long period investing. The strategies that you choose for an optimal trading strategy will count largely on your investment goals. Long period investing offers more benefits and rewards, while active portfolio management is very hands on and may mean ascertaining you investments frequently. The optimal investment strategy is to use long period investing and passive portfolio management instead active portfolio management.

The growth, integration and deregulation of world financial markets, as well as changes in international politics and financial policies have resulted in increased international investment opportunities. For demonstration, in 1991, of the $7 trillion (or £3.5 trillion) in worldwide pension finance assets, 7 percent was invested abroad. For US and UK pension funds, 4 percent and 25 percent respectively were invested abroad. These levels of foreign investment by pension funds are anticipated to increase considerably in future years. For demonstration, the grade of foreign investment by US pension funds is projected to be 13 percent by 1996, with the grade in Canadian pension funds anticipated to increase from 11 to 17 per cent between 1991-1994[3]. These increased international investment opportunities have also developed a variety of key economic challenges; especially in relative to currency risk exposure.

For stocks and bonds, there is considerable historic clues for over 30 years that investing internationally offers diversification benefits with respect to decreased portfolio risk and increased portfolio performance. Even though worldwide house accounts for 37 percent of the total world investable riches, the promise function and benefits of worldwide house in a mixed-asset portfolio has obtained little vigilance in latest years. This is due mainly to the restricted, valuation-based presentation indices which are accessible for worldwide property. Similarly, while ...