Managing Investments

Managing investments is the ongoing process of examining the organization’s long-term investment portfolio to ensure that it is meeting desired objectives. Investments are examined based on their expected return and perceived riskiness, among other factors, to determine their appropriateness for inclusion in the portfolio. Additionally, it is also important to ensure that the liquidity of the investments coincides with the needs of the firm.

BENEFITS MANAGING INVESTMENTS

Holding excess cash carries an opportunity cost; therefore it is in the best interest of your firm to invest funds that cannot be effectively used otherwise. However, over the past decade investment volatility and uncertainty have become commonplace. This is why your company must actively monitor and manage these assets.

THE MANAGING INVESTMENTS PROCESS

Compile information on investment holdings
Input past returns and estimate probabilities of recurrence for these holdings and the appropriate index
Calculate risk, return, and other relevant data for each individual investment
Complie information for the entire portfolio and determine if reallocations are necessary
If reallocations are determined to be beneficial, perform the preceding analysis on potential investments

FURTHER READING

These links elaborate on the topic at hand. They serve as a good starting point for those companies that would like to learn more or would like to address these topics “in house.” For those firms that prefer to continue to focus on their current responsibilities and would value the objective viewpoint of a professional from outside of the organization, click here.

Risk vs. Return
Excerpt: “Some investments are certainly more "risky" than others, but no investment is risk free. Trying to avoid risk by not investing at all can be the riskiest move of all. That would be like standing at the curb, never setting foot into the street.”

ImperoCo Business Solutions - "Developing Organizational Success."