Investment Management vs Asset Management In India: What is the difference?
The investment strategy is highly brimful of various jargon, and superfluous titles that ultimately make implications for holding the money. As a result, for investors, management of the investment effectively becomes a daunting challenge. But still there comes a big difference between Investment management Vs Asset Management.
Yet, hiring a professional expert can reduce these risks. You might have heard how asset and investment management is gaining popularity over time. If you haven’t been acquainted with these investing terms, let me help you to shed some light on both investment strategies. Weighing up both strategies individually can help you determine how it can be a useful tool for holding cash in the long run.
What is Investment Management?
The process of building and managing an investment portfolio is known as investment management. Investment management entails developing an investment plan, purchasing and selling investments like stocks and bonds, maintaining the asset allocation of the portfolio, and addressing tax consequences. Investment management can be done individually or with the assistance of an advisor. Investment management mainly focuses on overseeing the daily operations of the property. Together with this, they work closely with the tenants of the property and handle the tenant’s grievances, making it easier for the owners to perform other works.
And What Are The Types of Investment Managers?
Commercial Property Managers manage all the real estate business activities, including industrial buildings and handling of more nuanced administrative tasks.
Single-family Property Managers work for identifying the right investment for the investors and renting their houses for additional income.
What is Asset Management?
Most of the investors wish to invest and hold different properties like residential, commercial, multifamily, condos, retail spaces, etc. And investing in real estate often comes with challenges. As such, the property might face the risk of damage, tends to deteriorate over time or becomes complex to buy or sell. In such a case, hiring an asset manager can help to mitigate the risk and promote the value of the asset.
Because asset management can be understood as the process of maximizing the value and return on investment of the property, asset management firms eventually work for finding the highest and most consistent sources of revenue, reducing the expenditure, and cultivating the market value for increasing the returns.
What Are The Types Of Asset Managers?
Site Managers are assigned the handling of the condos, residential properties, and apartments. These are persons who form a medium of access between the owner and the tenants.
Regional Managers are referred to as supervisors, are entrusted with multiple properties over an expansive geographical area and include either the commercial or residential properties or both.
Investment Management Vs Asset Management: The Difference?
Meaning of the terms
Asset management refers to the power of assets of investors, including equity, fixed income securities, and real estate.
While investment management mainly focuses on overseeing the daily operations of the property.
Asset management service mainly works at maximizing the returns made by the investor from different projects in real estate.
On the other hand, objectives of investment management aim at balancing all the possible uses of an investor’s money either by preserving or maximizing wealth over time. The scope of investment management is broad.
The clientele of asset management and investment management is a key distinction. Asset management often deals with individuals or firms with large sums of money, whereas investment management frequently works with individuals or businesses of any size.
Most investors like to diversify their portfolios and include different types of asset property. But, no one is interested in displaying all the assets in the market at one time—especially the ones without having substantial insurance coverage. But, hiring asset managers can be useful in giving their expert advice for the allocation and the selection of the right assets compatible with the investment strategy.
On the other hand, mostly, the property owners are interested in possessing several rental properties in their portfolio but don’t have the expert knowledge to maintain the properties, in such cases, the hiring of a property manager can be beneficial for this. Their main job is to make sure things are running smoothly and that the property is maintained up-to-standards.
Asset management includes asset allocation, analyzing the past and current data, finding new investment opportunities, risk-return analysis, strategy for portfolio diversification, and identification of suitable assets.
Whereas, investment management includes asset management, tax planning, cash flow planning, real estate planning, and retirement planning.
The key responsibilities of asset management include maximization of total ROI, financial analysis and projections, the direction of cash flow, allocation of capital and resources, determination of the holding period of each property, etc.
While the critical responsibilities of the investment management include determination of rent charged to tenants, marketing the right property, screening the tenants, handling emergency repairs, creating monthly income and expenditure reports, providing important tax-filing documents, etc.
For asset management, you need to hire and pay the asset managers for finding and offering suitable assets that align with your goals.
While, for investment management, you need to hire and pay the investment managers for offering you the potential prospects of the investment in the long term.
Which Approach Should You Adopt?
Of course, it’s important to say that there’s no right or wrong answer to the above question. There’s also no strategy that is a size-fits-all to the solution. Every investor is different, and some may prefer Investment management over Asset Management. While both approaches are designed to positively impact your investments, their suitability largely depends on your personal needs.
So, naturally, if you are working towards your investment goals, you must choose a management plan that best suits your needs in achieving the goals. Whether you’re investment beginners or starting to diversify your existing portfolio, and looking to see your retirement, it’s worth assessing how you want to manage your money and get the high yields on the investment.
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Investment Management Vs Asset Management FAQ's:
Investment management mainly focuses on overseeing the daily operations of the property.
Investment management is the professional Asset Management, including securities like shares, etc. and also other assets like real estate to meet the specified investment goals of the investor.
Assets under management is the total market value of the investments that an asset manager holds on behalf of the investors.