Basics of Portfolio Planning and Construction

Free CFA Level I lesson in Portfolio Management. 20 min read, ~3,057 words.

A written IPS forces explicit goals, constraints, and rules of engagement, creates accountability, sets the performance benchmark, reduces behavioral mistakes, and survives manager turnover. Risk tolerance = MIN(willingness, ability). When they conflict, default to the lower (more conservative) and educate the client; never override ability. Return and risk objectives must...