In the world of investing and buying assets , you need to be quite cautious. Well, the numbers are not handled randomly.
In order to obtain a benefit from this, it is necessary to apply techniques, strategies and analysis that allow us to understand the behavior of financial investments .
One of these strategies is the so-called portfolio or investment portfolio . That for many years, remain applicable within the purchase of assets.
This article will explain everything about this investment strategy. And of course, we are going to show you the procedures to create an investment portfolio in spreadsheets using Excel.
what is a wallet or investment portfolio
When we are going to start investing, it is necessary that we have proper management of our assets . For this, it is necessary to create a portfolio or portfolio and investment.
Now, this term is used to represent a set of investment assets that are managed together. And it arises mainly with the aim of varying the purchase of assets based on the relationships that exist between them.
For example, if we buy all our assets from a company like Amazon, we will be risking our entire investment in one direction . Therefore, in the event of a decrease in our share price, the loss would be enormous. Thus, we could hardly recoup some investment.
This is where portfolio risks arise , they are used to take considerations when choosing the assets that will make up our investment portfolio. In the same way, there are portfolio theories , which pose the relationships that assets must have with each other to minimize loss and make an investment safely .
For example, some portfolio theories state that we must choose assets whose fluctuation is opposite and proportional, in this way, our loss is minimized but not recovered. Or, also indicate that we must assign most of our portfolio to companies whose stock fluctuations are more stable, so the profit will be minimal but safe.
Procedure to follow to select our assets
To start making our portfolio, the first thing we must do is organize the assets individually . Here we must analyze the expected benefits, taking into account the risk that is run by each asset.
Then, having our individual assets ready, it is necessary to establish the correlations that they present between them . For example, we must study if in case one goes down or goes up, how does the other react? Thus we can determine if they are independent, the relationship that exists or if one works as insurance for the other.
Now, we have to build our investment portfolio. To do this, in case we have only two assets. Then, it is easier to choose a portfolio theory that suits this. However, in most cases, we will have more than two assets, therefore it is necessary to choose portfolio theory that can be generalized to two or more assets.
Procedure to make a portfolio or investment portfolio in Excel
First, we must create two blocks where we identify the purchase of the market price of our assets. Thus, each of our assets in each block must be identified here, leaving the space for the purchase and market price blank.
For the identification of assets we must consider the following columns: the name of the company, the country of origin and the ticker.
Now, regarding the purchase section , it is made up of the following columns: Portfolio percentage, purchase prices in source currency, purchase prices in euros, purchase exchange rate, number of shares to purchase, the total, purchases and commissions.
For the exchange rate section , it is necessary to use the excel function that returns the currency price when entering the exchange currencies. In this way, we will automatically obtain updates on the prices of these currencies.
Regarding the market price block , it is necessary to start with the same identified columns of the assets as explained above.
First we locate the current price that the market manages, the market price in Europe , the variation of the final price, compared to the final price, the number of shares that were purchased, the latent purchase, and finally, we place the contribution of the purchased shares .
