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.
Related Terms
If a company was an apple pie, a stock would be a slice of the pie. In short, a stock is a slice of a company. Everyone who owns a piece of a company has the right to share a portion of the profits of the company. Read more
The stock market encompasses all the people, companies and institutions buying and selling slices of publicly-owned companies and other securities. Read more
A portfolio manager is responsible for investing their clients’ money. Also known as a wealth manager, they work for high net worth individuals and institutional clients such as mutual funds or insurance companies. Read more
About The Author: Edouard
Edouard est analyste financier chez Hardbacon. Il est responsable de la conception de listes de titres que nos utilisateurs peuvent trouver dans la section "explorer" de l'application.
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