Investment Portfolio
Explanation: An investment portfolio is a collection of assets owned by an individual or institution, managed to achieve financial goals. The portfolio can include a variety of asset classes such as stocks, bonds, real estate, commodities, and cash. The objective is to balance risk and return according to the investor’s risk tolerance, time horizon, and financial objectives.
Example: A balanced investment portfolio might consist of 60% stocks, 30% bonds, and 10% cash. This mix aims to provide growth through stocks, stability through bonds, and liquidity through cash.
Reference Link: For more information on investment portfolios, visit Investopedia’s Investment Portfolio.
FAQs:
- What is the purpose of an investment portfolio?
- To diversify investments, manage risk, and achieve financial goals such as growth, income, or capital preservation.
- How do you build an investment portfolio?
- By assessing risk tolerance, financial goals, and investment horizon, then selecting a mix of asset classes to match these factors.
- What is asset allocation?
- Asset allocation is the process of dividing investments among different asset categories, such as stocks, bonds, and cash, to balance risk and reward.
- How often should you review your investment portfolio?
- Regularly, at least annually, to ensure it remains aligned with your financial goals and risk tolerance.
- What is portfolio rebalancing?
- Rebalancing is the process of realigning the weightings of assets in a portfolio to maintain the desired level of asset allocation.