Principles of Asset Management



What assets should I choose?
The basic purpose of asset management is to provide sufficient funds to be used when necessary. To do this, you must manage your assets by choosing an investment target that can generate a steady and profitable return. This means that you must consider the safety, profitability, and liquidity of each financial asset.

If the value of a financial asset invested can be safely protected, it can be said that the safety is high. Profitability means profits from the invested financial assets. If a financial product is safe and profitable, then anyone will be willing to invest in it. However, it is generally known that higher profitable financial assets are more risky. Therefore, it is necessary to diversify and invest in various commodities considering both safety and profitability, rather than concentrating extra funds on specific financial assets.


Portfolio and diversified investment "Do not put eggs in a basket."
Principles of Asset Management
A portfolio is essentially a brief briefcase or collection of data. In finance, it is used to mean a list of financial assets held by a financial company or an individual. It means that an institution or individual invests in various assets in order to reduce the risk of investment.

James Tobin, who won the 1981 Nobel Prize in Economics for his "Theory of Financial Portfolios," told reporters that he wanted to explain it easily. "Do not put eggs in a basket. This is because the whole day is over when you drop the basket. "

This means that the next day, a professor of economics at Yale University, headlined the Malla Nobel Prize in an egg basket.

<Source: Korea Economic Daily, Oct. 5, 2010>


Liquidity means you can easily change your assets with cash. In everyday life, sudden cash is necessary. If you can not change it easily with cash, you have to pay a certain amount of money to convert it into cash.

In reality, it is not easy to find assets that have all three characteristics of safety, profitability and liquidity. Therefore, when managing assets, it is necessary to identify the characteristics of each asset, and then invest in selecting the appropriate one considering the purpose and period of investment.

댓글

댓글 쓰기

이 블로그의 인기 게시물

Credit Creation / Credit Crunch - Dictionary of Economic Terms

이미지
When a bank deposits its first deposit (the first deposit received), the bank leaves only a certain amount of reserves, and the rest of the loans are made. If the loan is used again, the bank will make a loan again. In this way, the phenomenon that a bank creates a deposit currency more than several times the initial deposit amount through a loan is called credit creation or deposit creation. And a multiple of the amount of money raised in the process of credit creation is called a credit multiplier. - Loans and deposits are repeated and the entire loan is deposited back into the bank in the form of derivative deposits (deposits deposited with current deposits) Once the process is repeated, the credit creation limit (X) for a given original deposit is defined as X = C (1-R) ​​/ R. Where C is the original deposit, and R is the bank's reserve prepayment rate. - Credit crunch means that households or businesses suffer difficulties as financial institutions do not pro...
자세한 내용 보기

Types of Funds - Current affairs dictionary

이미지
Funds are divided into bonds and equity depending on whether they buy bonds or buy stocks. Funds can be divided into growth type, stable growth type, and stable type depending on the stock addition ratio. ■ Bond-type fund / equity-type fund The classification of a fund is divided into equity, hybrid, and bond types depending on how much money you invest in stocks. If you invest more than 60% in stocks and bonds, Respectively. In other words, "bond fund" is a commodity that invests more than 60% of trust assets in bonds and bonds-related derivatives without including stocks (including stock-related derivatives) in the operation target. 'Equity-type funds' are commodities that invest more than 60% of trust assets in stocks and equity-linked derivatives (stock index futures and options), and equity-type funds have the risk of incurring principal, unlike bonds. On the other hand, if the stock market is highly profitable, it can generate high returns. ...
자세한 내용 보기

Credit inflation - Economics Dictionary

이미지
Credit inflation is often used to refer to the case where excessive credit expansion causes water prices . Excessive credit refers to a situation in which a borrower who is unable to pay is credited and the bank provides credit beyond the limit of the deposit, indicating a credit expansion that corresponds to the output level. In the boom period, the credit expansion and the price of the ears occur at the same time, but the credit expansion at this time reflects the expansion of the reproduction and the increase of the transaction amount. Even at the end of the boom, when there is a limit to the accumulation of capital, credit still continues to expand. At this time, excessive credit occurs, and such credit brings the price of water for a certain period of time. In times of depression, if credits to be shrunk in response to shrinking reproduction are sustained at a high level supported by low interest rate policies or bailouts, excessive credit will prevent price declines fo...
자세한 내용 보기