# How to Do Portfolio Optimization Using Excel Solver: 2 Easy Methods

## Method 1 – Optimizing Investment Portfolio Based on Total Yield Using Excel Solver

Steps

• Use the following steps to set up the Solver Parameters dialog box. This dialog box appears when you choose Data ➪ Analysis ➪ Solver.

• Set Objective field with this value: \$E\$13.
• Select the radio button for the Max option in To Control.

• Select cell \$D\$6 to \$D\$10 to fill the field By Changing Variable Cells. This field will show \$D\$6:\$D\$10.

• Add constraints one by one. The constraints are: \$D\$11= \$C\$4 \$D\$6 >= \$D\$7*3, \$E\$15>= 0.15, \$F\$9 <= 0.25, \$F\$10>= 0.1. These constraints will be shown in the Subject to the Constraints field.
• Select the Make Unconstrained Variables Non-Negative check box.

• Select GRG Nonlinear from the Select a Solving Method drop-down list.

• Click the Solve button. Click OK.
• There will be another dialog box in which you need to select the result types.
• You need to select Keep Solver Solution. Otherwise, the values will revert to the original values.
• From the right side of the dialog box, select all the options in the Reports.
• Click OK.

• We entered 1,000,000 in the changing cells as the starting values. When you run Solver with these parameters, it produces the solution shown in the following figure with a total yield of 9.25%.
• The Auto Loans values also changed to 15%.
• This is how we got the highest optimization value of Total Yield considering all the constraints.

• We completed the optimization of an investment portfolio using the Excel solver.

## Method 2 – Optimizing Investment Portfolio Based on Auto Loans with Excel Solver.

Steps

• Our main goal would be to try to minimize the Auto Loans.
• We will select cell E15. The location of the Auto Loan value as the Objective value.
• We will set Min in the To option.
• Doing this will ensure that the solution will try to minimize the Auto Loan value while finding a solution.
• Keep all the constraints the same as before.
• Click OK.
• Clicking OK will run the Solver.

• After clicking Solver, the solver will Run.
• After the Solver had finished the calculation, we can see that the minimized Loan value based on all the other criteria is present.
• It also affected the Total Yield value in E13.

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Kawser Ahmed

Kawser Ahmed is a Microsoft Excel Expert, Udemy Course Instructor, Data Analyst, Finance professional, and Chief Editor of ExcelDemy. He is the founder and CEO of SOFTEKO (a software and content marketing company). He has a B.Sc in Electrical and Electronics Engineering. As a Udemy instructor, he offers 8 acclaimed Excel courses, one selected for Udemy Business. A devoted MS Excel enthusiast, Kawser has contributed over 200 articles and reviewed thousands more. His expertise extends to Data Analysis,... Read Full Bio

Harrison Delfino May 2, 2017 at 8:47 AM

I am using MarketXLS. It works great for me.﻿

2. Hi , Great Work !!! Thank you for this informative post ! Do you get these questions from a book or do you write them yourself ? If you use a book would you mind sharing its name if not again wonderful post . All the best.

• Dear Evangeline,

Thanks for your appreciation. Our experienced writers write these questions after doing a complete research about the topic.

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