What is a Portfolio?


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A portfolio is a collection of financial assets, such as stocks, bonds, cash, real estate, or alternative investments.

Understanding a portfolio

A portfolio is a window into your financial life and provides insight into how you want to invest your money. For many people, a portfolio is a collection of stocks, bonds and cash. But in a broader sense, it can also include other assets such as foreign currencies, gold, art, real estate or investments in private companies. Many factors can influence the design of your portfolio, such as how much risk you’re willing to take and how long you want to hold each asset.


Suppose a person wants to invest $1,000, and he wants to allocate that sum among different asset classes. Initially, he might buy $250 in Apple stock and $150 in Nike. However, if he’s concerned about being dependent on the performance of only two companies, he could expand his choices. To round out his portfolio, the investor could also buy $330 worth of municipal bonds and $270 worth of an index fund that tracks the S&P 500. In this case, the investor would hold 67% of his portfolio in stocks ($670) and 33% in bonds ($330), for a total of $1,000.
*Indices are unmanaged, incur no management fees, costs or expenses, and cannot be invested in directly. *


A portfolio is your investment pie…

Each asset represents a piece of the pie, whether it is stocks, bonds, mutual funds, exchange-traded funds (ETFs), cash, or something else. Pieces are in proportion to the total pie. For example, if 50% of your portfolio is stocks, the “stocks” piece would be half of the pie. Depending on how stock prices rise and fall, the size of that piece would grow or shrink accordingly.

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