Securities portfolio formation for a private investor

Abstract

Investment activity on the stock market is more profitable, but it is also more risky than a bank deposit. Therefore, a private investor needs to develop his investment strategy corresponding the goal and form his investment securities portfolio that will correspond to chosen profitability and risk level. Thus, the choice of assets, calculation of future expected income and risk assessment that affects the investment portfolio and its profitability are necessary elements of successful investment, allowing to avoid bad mistakes that can lead to less profits, and even losses. The article reveals an algorithm for searching, collecting and processing information to include this or that asset in the investment portfolio, risk assessment and calculation of future portfolio profitability, based on historical approach. The purpose of the article is to show that moderate diversification, inclusion of dividend stocks in the portfolio, and growth stocks improve profitability indicators reducing risk at the same time, which allows to outperform the market.