Name: Joey Aliotta
SIP Type: One-Credit Experiential-Based SIP
Tentative Title: An Optimal Portfolio
Dilemma: Many Americans need help on how to manage their money. In a time where
savings is at an all time low, debt is sky high, and 34% of Americans haven’t saved for
retirement, wealth management is a clear crisis. Many people look to maximize personal
gain in wealth through different investment approaches. The major dilemma in investing is
determining the right amount of risky investments and the right amount of riskless
investments. It is important to have the right combination to ensure the maximum actual
rate of return in a portfolio, thus maximizing personal gain in wealth.
Research Question: Which approach to investing is more viable, actively managing
portfolios, or passively managing portfolios?
Research Design: This study will break down and compare two major approaches to
personal investing. The first approach, actively managing investments, is where an
individual monitors an investment portfolio. This approach incorporates the modern
portfolio theory as the main strategy. This theory attempts to maximize average returns
given an amount of risk in a portfolio, by carefully selecting the correct proportion of a
variety of assets. This theory also applies the major investment principle of diversification,
or investing in multiple different assets with jointly lower risk than one single asset.
The second common approach is passively managing investments. Passive management
seeks to provide a safe approach by making investments that echo the components of a
market index. Rather than having someone pick individual assets to invest in, passive
management is investing money into benchmark indexes, such as passive managed index
