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Portfolio

A portfolio is a collection of financial assets such as stocks, bonds, mutual funds, real estate, and other investments held by an individual or institution. Portfolios are designed to achieve specific investment goals, such as growth, income, or capital preservation, and are typically diversified to manage risk. The composition of a portfolio reflects the investor’s risk tolerance, time horizon, and investment objectives, and it can be actively or passively managed.

Example

An investor’s portfolio includes a mix of 60% stocks, 30% bonds, and 10% real estate, aiming for balanced growth and income while managing risk.

Key points

• A collection of financial assets held by an individual or institution.

• Designed to achieve specific investment goals like growth or income.

• Can be diversified to manage risk and align with the investor’s objectives.

Quick Answers to Curious Questions

Diversification helps reduce risk by spreading investments across different asset classes, industries, or geographic regions.

Investors consider their risk tolerance, investment goals, and time horizon when selecting the appropriate mix of assets.

Active management involves frequent buying and selling to outperform the market, while passive management tracks a market index for long-term performance.