The basic aim of this report is to follow the guidelines that we have learned regarding how to make an investment plan, and also to make an effective and diversified investment portfolio with a given amount of money; the ultimate objective of it is achieving the highest possible returns. Such portfolio will be developed after evaluating all the possible investment options and further selection of the most suitable mix of investments.
Prior to making an investment plan I need to take care of certain investment prerequisites which require me to adequately provide for the life necessities. Additionally, I should have a pool of easily accessible liquid funds which can be used in case of any unforeseen emergency to cover up the common risks. After providing all such expenses and necessities I will have AED 300,000 at my disposal to make an investment portfolio after following a well planned investment plan.
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Establishing Investment Goals
The next step in the investment process is establishing investment goals, which implies the core objectives behind doing this exercise. These investment goals will determine the type of investment I will be opting for. In this case, my object of investment is very straightforward - I want to get the highest profits from my investments, keeping the level of risk at a minimum acceptable point in the meanwhile. I also want to enhance my current income so my aim would be to increase that amount of AED 300,000 up to any maximum level.
Adopting an Investment Plan
It is very natural for an investment option with a great degree of risk to hold a greater potential of generating higher returns, but that also means the increasing of chance to lose the investments. Since my approach in this investment process and planning is quite conservative considering the amount of money used, I will begin my plan with a focus on stocks of corporate companies that carry less risk and volatility. I will be moving towards the riskier investment options later on once the market projections and trends would become clear to me. I am also inclined towards investing in noble metals such as gold as this process of money making is the easiest way given the buying and selling without any complex mix of calculations.
Evaluating Investment Vehicles
There are several other investment alternatives from which I can choose, such as bonds, mutual funds, derivatives, noble metals, real estate properties etc. Investments in mutual funds always carry a greater marketing and resource risk and there will be huge losses if this investment is not adequately diversified. There are also tax concerns which are not in favor of a profit maximizing investment orientation. In case the derivatives are concerned as an alternative investment option, these instruments possess too complex structure and at this early stage of investment planning they would not be viable. The recent slump in the international real estate business has made sensible investors very reluctant to trust this mode of profit making and still the market is in a recovery mode, especially in this part of the world. So I would undertake any risky ventures at this phase of the investment journey. Considering the noble metals as an option for investment such as gold, there has been a great deal of volatility on its prices all over the world recently. The prices of gold have seen a drop of almost 13% in the steepest fall during the last 33 years. Prices of other commodities such as silver, crude oil and copper also decreased in the recent years. Such sharp decline in the value of such option of investment is not a healthy sign for trading.
Selecting Suitable Investments
After considering all the available investment options and keeping in mind my investment goals and other factors such as expected return, risk, and tax considerations I am now in the position to make a prudent decision about making a suitable investment. After creating an effective investment plan and evaluating all the possible investment options I have reached the moment of making an investment portfolio which is diversified and lucrative. I have made investments with the given amount of money in a proportion of 83% to 17%. Most of the amount at my disposal goes to a range of blue chip stocks that reflects 83% of my total investment funds while I have chosen to invest the remaining 17% in gold as this was the easiest deal of all, and I only have to wait for a rise in gold prices above my limit and I can sell it to make a healthy return on my money.