Are you looking to unlock your financial potential? Investment management could be the answer! Whether you’re a beginner or an experienced investor, investment management offers the tools and knowledge you need to create a successful portfolio. In this guide, we’ll explore what investment management is, its objectives, types, career outlook, and how it works.
What is Investment Management?
Investment management is the process of making decisions about investments. It involves researching, selecting, and monitoring a portfolio of assets that match an investor’s goals, risk profile, and timeframes. Investment management encompasses a wide range of investment opportunities for individuals or institutions looking to grow their wealth from stocks and bonds to real estate and other asset classes.
By taking into account various factors such as liquidity, market conditions, tax implications, and more, investment managers provide expert advice on managing your investments for maximum returns. Whether you are an individual investor or an institution seeking a professional advisor, investment management can help you make the most of your money today – and tomorrow.
Moreover, you should be aware that success in investment management comes with inherent risks, and you should always consult a qualified professional before making any financial decisions.
Investment Management Objectives
It involves creating a portfolio of investments that generate returns while minimising risk. Other than this, there are various objectives such as
1. Assess and manage risk
Investment managers must assess the amount of risk they’re willing to take and how to manage it on an ongoing basis.
2. Establish goals
An investment manager will help you determine your financial objectives and create a strategy to reach them.
3. Select investments
With a deep understanding of different asset classes, the manager will choose appropriate investments for the investor’s needs.
4. Monitor progress
The manager will track market conditions and adjust the portfolio accordingly to maximise returns while mitigating risks when necessary.
5. Maximise returns
Through careful portfolio management, investment managers strive to maximise gains while minimising losses over time, with attention given to tax efficiency and liquidity.
How Does Investment Management Work?
It is important to know how investment management works. This can be crucial in helping you make informed decisions when it comes to investing and managing your finances:
Establish Investment Goals
Before taking the plunge and investing, it is essential to define your personal investment goals and objectives. You should consider elements like the level of risk you are willing to bear, what kind of returns you would be content with, for how long you intend to be an investor, and any moral considerations that could affect your decisions.
Establish a Plan
After you have identified your investment goals, decide on the strategy that fits best for you. You can choose between active or passive management options depending on how much effort and time you want to put into the process. Active managers opt for individual stocks based on their research to outperform market returns, while passive investors invest in index funds pursuing only traditional market indices movements.
Uncover and Choose Your Investments
After deciding on your strategy, you will need to research the most suitable investments for your portfolio. If you’re an active investor, this means studying individual stocks or other securities to identify potential investment options. You should consider factors such as a company’s financials, industry trends, and competition when making your decision. For passive investors who prefer index funds, selecting those that align with your goals is essential to maximise returns down the line.
Track Your Portfolio
After you’ve chosen your investments, it’s essential to observe them closely. This involves staying informed about the markets and keeping up with any news that may influence their value.
Rebalance Your Portfolio
Periodically, you should look at how your investments have performed over time and determine if any rebalancing needs to be done. This means adjusting the mix of assets in your portfolio to stay aligned with your goals and objectives. Rebalancing may also help reduce risk and ensure that you take advantage of any market opportunities.
The final step in successful investment management is staying informed and up-to-date on the markets. This means reading market news, staying abreast of any changes to tax laws, and understanding how economic events may affect your investments. By staying informed, you can make better decisions about when to buy and sell assets to maximise your returns.
Types of Investment Management
Investment management can take many different forms and vary based on the type of asset being managed such as
1. Traditional Investment
This is the most basic form of investing, in which a portfolio manager invests in stocks, bonds, and other assets according to an investor’s goals.
2. Hedge Fund Investing
Hedge funds are investment vehicles that use alternative strategies such as leveraging debt and using derivatives to maximise returns.
3. Private Equity Investing
Private equity investments involve buying stakes in private companies that may not be publicly traded on stock exchanges.
4. Real Estate Investing
It involves purchasing properties to generate rental income or capital appreciation over time.
5. Mutual Fund Investing
Mutual funds are investment vehicles that pool money from many investors and invest in a wide range of assets.
6. Portfolio Management
This umbrella term encompasses all the other forms of investment management, where portfolio managers oversee the entire investment process, from selecting investments to monitoring performance and taking action when necessary.
7. Quantitative Investing
This type of investing involves creating algorithms or models to identify trends and uncover potential market trading opportunities based on sophisticated data analysis techniques.
8. Cryptocurrency Investing
This type involves buying and selling digital currencies, such as Bitcoin and Ethereum, to capitalise on price fluctuations in a highly volatile market.
The Career Outlook of Investment Management
Investment management is a lucrative career choice with a strong outlook for growth.
According to AmbitionBox, In India, an Investment Manager can expect an average salary of ₹8,51,732 per year. This salary can range from ₹4.14 Lakhs to ₹20.85 Lakhs or higher depending on the experience and skill set of the individual.
The location-wise salary in India varies greatly depending on the city. For example, an Investment Manager in Bangalore earns ₹9.76 Lakhs per year compared to someone doing the same type of job in Mumbai who earns ₹8.19 Lakhs per year, according to a general survey.
Those pursuing a career in investment management have many opportunities for advancement in their field. The industry is proliferating, and there are many specialised roles, such as portfolio manager, security analyst, and financial advisor. Investment management professionals can gain valuable experience by earning related certifications such as the Chartered Financial Analyst (CFA) or Certified Financial Planner (CFP).
What Does an Investment Manager do?
An investment manager is a professional with specialised knowledge of capital markets and investments. Their functions and roles include
- They work with individuals, families, and institutions to create customised strategies for growing and protecting their wealth.
- Investment managers oversee portfolios of investments and advise clients on their assets.
- They research potential investments, monitor existing investments’ performance, analyse market trends, create investment plans tailored to individual clients, and recommend changes or adjustments to help meet their long-term goals.
- Investment managers determine how money should be allocated and invested in stocks, bonds, mutual funds, hedge funds, and other securities to ensure the best possible return.
- They must have an in-depth knowledge of financial markets, investment strategies, and economic trends.
- Investment managers are also responsible for keeping records of investments and providing regular reports to their clients detailing performance over time.
- When it comes to retirement planning, investment managers help clients set financial goals and create plans to meet them.
- Investment managers also help students with financial planning for college tuition and work to ensure that money is invested in the most tax-efficient manner.
- They also help you when you want to make purchases such as real estate, cars, or other big-ticket items.
Is Investment Management a Good Career for you?
According to the U.S. Bureau of Labor Statistics, employment in investment management is projected to grow 6% from 2018-2028. That’s faster than the average rate of all occupations combined globally. Moreover, investment management can be a good career choice for the following reasons
- It provides a high level of financial security. Investment managers are highly compensated and often benefit from a steady, predictable income that can support a comfortable lifestyle.
- It offers excellent job prospects. Investment management is a growing field with plenty of job opportunities. As more investors become interested in the stock market, there will be greater demand for investment professionals who can help manage their portfolios.
- Additionally, it has low barriers to entry. Unlike many other financial fields, investment management does not require an extensive background in finance or economics. As long as you have basic knowledge of the stock market and a desire to learn more about investing, you can quickly get started in the field.
- Investment management allows for career advancement. With experience and qualifications, investment professionals can expect to be promoted to higher positions with better pay, more responsibilities, and greater autonomy.
- It is an intellectually stimulating career. There are always new challenges and a constant need to stay updated with stock market news, current regulations, industry trends, and the latest financial products. This makes for an exciting career that never gets boring.
- Investment management offers global opportunities. As the stock market continues to expand, there are plenty of opportunities to work with international clients and manage foreign investments. This can be a great way to diversify your portfolio and gain valuable experience in different global markets.
Organisations are now looking for clear frameworks to resist volatility and accelerate growth as business demands change. The job of finance experts has expanded more than ever, and it is now essential to have a strategic outlook, industry-ready financial knowledge, and caution to help boost firm profitability and expansion.
Henceforth, to be an asset in any organisation it is imperative for you to upgrade and upskill your knowledge. Emeritus offers a diverse range of online courses in collaboration with renowned universities like IIM, IIT, etc. Check out eclectic finance certification courses that Emeritus hosts. However, if you are looking for something specific in investment management then you should have a glance at Venture Capital and Equity Programme by ISB Executive Education.