How finance folk use it
A financial portfolio is a collection of different types of assets. These include stocks, bonds, commodities, funds and real estate.
Your portfolio can be run by a professional manager, or you can choose to take care of it yourself. Either way, typical maintenance includes watching the performance of each individual investment and seeing if these continue to match your goals, and looking for more assets to add.
Is it good or bad?
Having a portfolio is good, because it means that you have different investments that are all meant to help you achieve a goal. Since performance can vary across the different investment classes, the chances are higher that you will be able to achieve your goal.
Also, when you have just one type of investment, you run the risk of being significantly affected in case something bad happens in that market. With a properly diversified portfolio, you would be better able to spread out the risk.
Of course, there are other ways to diversify your portfolio.
What it means for you
As an investor, having a portfolio helps you deal with risks in a way that no single investment can. Remember also that you aren’t limited to having just one portfolio. You can have as many as you want, as long as you have the capacity for it.
Each portfolio you have must be created with a certain goal in mind. This will help you choose the right investment products that go into it. Of course, each of these must still match your risk tolerance and time horizon.
