An investment policy must be formulated and based upon the specific circumstances and characteristics of each investor. These situation specific characteristics include:
The investment policy must take into account inflation, economic growth, and the investor's investment time horizon. Additionally, an investment policy must consider the investor's consumption or desired consumption profile, which is influenced by five factors:
Establishing investment objectives Typical investment objectives that must be considered and formulated into an investor's investment policy and asset allocation decisions include:
Introduction to portfolio management In order to formulate a portfolio management strategy, it is important to understand some basic information such as what an investment is. An investment is defined as any asset into which funds can be placed with the expectation that the invested capital will generate additional positive income; and many investors, will insist that, as a minimum requirement, the investment will preserve its value.
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