BUILDING A CONSOLIDATED INVESTMENT PORTFOLIO

"Okay, so i have little bit of money in my fixed deposit account, hmm...maybe around RM 20000. And i think i have about RM 50000 worth of shares which i bought a few years ago. I think the value is appreciating but i don't know its real value now! In Unit trust funds, i have invested RM 10000. I bought some funds but i have no idea what are the names of the funds and i don't know if i am profiting form it, or not. May yes, i am!

I have bought a house for RM 200000 for investment purpose a couple of years ago and the value now is good, though i am not sure about the figures. Oh yes! before i forget, i do keep some money in my savings account in a local bank. Hmm, i think the amount is around RM 30000. For my retirement, so far in the latest Employment Providence Fund (EPF) statement which i received last month stated i have RM 150000 in total. I have a great feeling that all my money is working hard for me and i am happy this way!!"

Quite familiar with the statement above? 

I am sure that many people out there have started making the first step to save and invest their money in various financial products for the reason of hoping to be freed from the shackle of 'insufficient fund status" when problems come knocking on your doors in future.

Unconsolidated portfolios are as good as driving down a foggy road, not knowing what may come up obstructing you along the way. A consolidated account is essential not only for the purpose of having a clear view where you are heading to (financially), but also paramount in moving one asset to another asset (combining) otherwise known as portfolio re-balancing strategy. There is nothing to worry about it technically because the method is very simple. You need not to have rocket-science knowledge to practise this. It's as simple as smiling!

Here's how. I have based my portfolio creation (Table A) on the sample scenario dictated on top.

1.  First you need to consolidate all your present investment

     products in a table and find for the individual product's

     exposure against the total investment. (see table A).

2.  Next, you get the current market's expected rate of return

     (EROR) for the individual product. In the table A, i have 

     made that assumption for you.(Table A)

3.  The last column, weighted expected return of portfolio

     (WERP) is derived from multiplying EROR with asset

     allocation exposure to portfolio.(Table A)

The average estimated portfolio return which your consolidated portfolio will generate is 6.28%.(see table A)

There you are!! Now you are aware that your total investment products after consolidation will generate a handsome return of 6.28%. But wait, what can we do with this piece of information? I will tell you in the next blog article.

Table A: A consolidated Investment Portfolio.