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Business Making: Individual Trust Management Part 1

Individual trust management gives to the investor with the solid sum of means all variety of methods of earning on securities with a view of achievement of its investment purposes.

What strategy is the most appropriate for the investor depends first of all on psychological propensity of the investor to risk and the whole group of objective factors.

The investor who has saved savings before a retirement will prefer more conservative strategy aimed at a capital saving and the reliable income.

If from the money transferred in trust management, some dependents, that probably depend on it, the choice of speculative strategy in this case would be unjustified risk.

Much depends and on, whether the investor has the constant high income and will add to the sum of the assets transferred in control, or, on the contrary, needs use of accumulated savings and consequently will periodically remove the income.

The confidential managing director can suggest filling the special questionnaire with similar questions that will help the investor to specify strategy approaching for it.

Though the core advantage of trust management is possibility of creation of any strategy according to requirements of the client, many managing directors offer from three to five strategies.

The basic strategy depends on a ratio in a share portfolio and bonds and provides to the investor various variants of profitableness and risk.

1. A portfolio of liquid shares.

Basis of an investment portfolio of the given type are, first of all, liquid shares of the largest enterprises. Bonds or bills are used only as the tool of capital preservation in the absence of a favorable conjuncture in the share market. The risk of such portfolio is high, and profitableness depends on accuracy of forecasting of market conditions managing director. Management style of such portfolio is active – the managing director tries to show profitableness above market (indexes).

2. The balanced portfolio.

In a portfolio depending on market conditions bonds or shares prevail, but always there is enough most part fixed yield securities.

For example, capital distribution can be such:

Availability in a portfolio of bonds reduces risk, and shares provide higher income. Thus the risk and profitableness balance sheet is reached. Management style of such portfolio is also active.

3. A conservative portfolio of bonds.

Though in such portfolio also there can be shares, their share can’t exceed size of 10-20 %, differently such portfolio won’t answer criteria of the least risk. This strategy is intended for investors who want to keep first of all available means, receiving profitableness above, than level of rates of deposits in banks that is reached by investment in corporate bonds.

For the given strategy the managing director can warrant any minimum profitableness, the truth, not exceeding look-ahead inflation rates or rates of bank deposits.

And investment in government bonds with the profitableness which is not covering inflation rates can compete bank contributions on which the income at least on a rate of inflation is warranted.

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