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Diversification is not putting all your money into just one type of investment. Direct investment in equity market leads to high risk. Diversification helps in averting risk by way of using diversifiable portfolio. Beneficial for all investor in this economic downtime.
SECTOR
Automobile and Parts Banks Cement Chemicals Electricity Fertilizer Fixed Line Telecommunication Non Life Insurance Oil and Gas Personal Goods
23 14.70 33 1 4.40 19 -
36.66 -
30.74 5.41
The more ways you diversify the more likely you are to reduce your risk. Diversification can be done across:
Different asset classes (cash, fixed interest, property, shares)
More than one investment in each asset class (e.g. several different
industries and companies when investing in shares) More than one type of fund and investment manager when investing in
managed funds.
Investment objectives.
Investing principles.
Investing strategies.
Risk tolerance.
Determine Your Initial Target Portfolio Monetary Goal. Determine Target Percentages for Each Asset Class. Calculate the Target Amount for Each Asset Class in Both
Purchase the Assets and Compare the Actual Portfolio with the
Target Portfolio.
Risk Diversification and Reduction. Minimal Security Analysis. Systematic Investment Approach. Passive Investment Style.
Reduces Quality. Too Complicated. Market Risk. Below Average Returns. Bad Investment Vehicles. Lack of Focus or Attention to Your Portfolio.
Case Study: Turkish Investment Portfolio 12.02.2013 Do you have clients who are Turkish residents and are looking for a life insurance product specific to their needs? We have prepared a case study for Turkish Investment Portfolios.
Case:
The client is a Turkish resident entrepreneur, who owns a successful and expanding local business. Over the years, he has invested a portion of the profits from the business into building a substantial investment portfolio, made up primarily of: shares in Turkish listed and non-listed companies; bonds and equivalent instruments issued by Turkish companies; and Turkish Government bonds.
He is married, with three children, who are planning to move abroad for their studies in the future.
Issue:
In view of the risks associated with his expanding business, the client is looking to protect his assets. The client is looking to mitigate tax exposure generated by his investment portfolio. His children are still young and his wife has never worked, therefore the client is also looking to ensure the future financial stability of his family, should something happen to him.
Solution:
The Client concludes a LAP Luxembourg life insurance contract, of which he is both policyholder and insured person. He pays the premium partly in cash and partly through the transfer of assets held in his investment portfolio to Swiss Life (Luxembourg) S.A. The client appoints his wife and children as beneficiaries of the policy, and opts for a death cover which, upon his demise, will provide an additional 5% on top of the value of the contract.
Benefits:
Asset Protection: legal ownership of the portfolio is transferred to
Swiss Life (Luxembourg) SA, thereby providing an additional layer of protection against potential future creditors.
Practical example
In 2011 the client receives a dividend in the amount of TRY 60 000 from a relevant participation in a Turkish company
After holding his participation in a non-listed Turkish company for 1 year, the client decides to sell it and generates a capital gains of TRY 150 000
97 500 TRY
The client decides as well to sell his government and Turkish companies bond portfolio, generating a gain of 90 000 TRY
81 000 TRY
90 000 TRY