Portfolio management involves building and overseeing a selection of investments that will meet the long-term financial goals and risk tolerance of an investor. Active portfolio management requires strategically buying and selling stocks and other assets in an effort to beat the broader market. Passive portfolio management seeks to match the returns of the market by mimicking the makeup of a particular index or indexes. Understanding Portfolio Management - Professional licensed portfolio managers work on behalf of clients, while individuals may choose to build and manage their own portfolios. In either case, the portfolio manager's ultimate goal is to maximize the investments' expected return within an appropriate level of risk exposure.

Portfolio management requires the ability to weigh strengths and weaknesses, opportunities and threats across the full spectrum of investments. The choices involve trade-offs, from debt versus equity to domestic versus international and growth versus safety.