What is Investment Portfolio?
An Investment Portfolio (or financial portfolio) is a combination of financial assets an investor owns, including stocks, bonds, money market instruments, cash and cash equivalents, and other financial or non-financial assets. Further, a portfolio investment refers to the group of investments formed in the expectation of earning a return or the value growing with time. This differs from direct investment which includes an active management role, whereas portfolio investment involves passive or indirect ownership of assets or management roles. Investors here look for significant returns supporting their financial goals and risk appetite.
Geeky Takeaways:
- An investment portfolio is a financial asset that is bought with the expectation of earning a return or the value growing with time.
- Mainly two categories namely Strategic investment (long-term approach) and Tactical investment (short-term approach).
- Risk tolerance and time horizon are the two key factors in choosing an investment portfolio.
- The investment portfolio comprises a broad range of financial assets such as stocks, bonds (corporate and government), real estate investment trusts (REITs), mutual funds, exchange-traded funds (ETFs), and bank certificates of deposits (CDs). Options, futures, and warrants are also included in the portfolio investment.
- Investors create a portfolio to generate revenue while maintaining the capital or share of the asset preserved.
Table of Content
- Components of a Portfolio
- Types of Portfolios
- Investment Portfolios and Risk Tolerance
- Steps of Building an Investment Portfolio
- Importance of a diversified portfolio
- Advantages of Portfolio Investment
- Disadvantages of Portfolio Investment
- Frequently Asked Questions (FAQs)