A model portfolio – What is it?

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Every investor knows how difficult it can be to pick the right stock. It’s even more difficult to build up an optimal securities portfolio on your own. However, a model portfolio can help. A model portfolio is a virtual investment portfolio. This sample portfolio is purely hypothetical – the user manages and trades securities without making any real use of money. This means that all purchases and sales carried out do not take place in reality. Investors can try out many different strategies and trade with stocks, bonds, funds or ETF shares, foreign exchange, certificates or warrants. MoneyController offers this service. A virtual portfolio can be used free of charge on the platform. The investor can add and analyse their securities, as well as explore the expected return and the risk of the portfolio and use a certain function to optimise the composition of the securities. You don't need any special skills to use the free MoneyController sample portfolio and you don't need to be a financial expert. The portal uses simple language to explain complex risk indicators that are used daily by financial professionals.

In the case of investments that are entrusted to several banks and financial services institutions, investor’s can build up a global portfolio with the free model portfolio and derive an overall assessment: in this way, the decisions of one portfolio manager are correlated with the decisions of the other. In fact, MoneyController has a database with over 30,000 titles (German and foreign approved funds, ETFs, German and foreign stocks) that are updated daily. The aim is to optimise your virtual portfolio. Optimising a portfolio thanks to a model portfolio means achieving an optimal risk-return ratio, i.e. creating a portfolio with the highest return with the same risk; or the portfolio with the lowest risk with the same return. In a nutshell, you create what we call an “excellent” portfolio.

How do you use the MoneyController sample depository? Simply decide on the securities that you would like to include in the portfolio to be analysed and select them from those already in the database. It’s then necessary to assign a percentage weighting within the portfolio or an absolute amount to each security in the portfolio and to specify the parameters of the maximum accepted risk and the expected return. As soon as the virtual portfolio has been created, it can be saved, with the advantage that the updated values can always be retrieved. The “Optimise” function shows the portfolio with the best risk-return ratio, whereby the same securities entered are always reweighted. Finally, the investor is shown ten more optimised portfolios, sorted by increasing return, all calculated by redistributing the weights between the securities specified by the investor.

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