The basic characteristics of an investment portfolio are usually determined by the position and characteristics of the owner or owners . At one extreme we have had savings bank , life insurance companies and so called legal trust funds .
A generation ago their investments were limited by law in many states to high grade bonds and in some cases , high grade preferred stocks . At the other extreme we have the well-to-do and experienced businessman , who will include any kind of bond or stock in his security list provided he considers it an attractive purchase .
It has been an old and sound principle that those who cannot afford to take risks should be content with a relatively low return on their investment funds . From this there has developed the general notion that the rate of return which the investor should aim for is more or less proportionate to the degree of risk he is ready to run .
The rate of return sought should be dependent , rather , on the amount of intelligent effort the investor is willing and able to bring to bear on his task . The minimum return goes to passive investor , who wants both safety and freedom from concern . The maximum return would be realized by the alert and enterprising investor who exercises maximum intelligence and skill .
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