A portfolio is the sum of all your investments put together. For example, if you own two apartment buildings, your real estate portfolio is composed of those two buildings. It’s the same for stocks and other financial products. Investing in more than one financial product is advisable, because it reduces your risk. Risk of what? Losing all your money. If one of the company in your stock portfolio goes bankrupt, you still have other investments that will continue to grow. This is called diversification. Portfolios can also be more or less risky. In theory, the more risky they are, the more potential for returns they have on the long run. But while a risky portfolio can be perfect for a young person, it can be a bad idea for a retiree who counts on his investments to do the groceries. The risk profile of your portfolio should match your finanial goals, and your personality so you can go to sleep without worrying.

« Back to Glossary Index