Portfolio Definition

A portfolio is a group of investments held or owned by a particular individual or organization.

Function

The purpose of a portfolio is to increase the wealth of the owner of the investments.

Types

There are many types of portfolios that contain investments such as stocks, bonds, mutual funds, commodities and real estate.

Size

If the value of most of the investments within a portfolio grows, the value of the entire portfolio will increase.

Benefits

A portfolio containing multiple investment types should lower the potential risk of loss. This diversification helps protect the entire portfolio from substantial losses when a single investment in the portfolio loses value.

Warning

Just because a portfolio is diversified does not mean it will not lose money. The strength of a portfolio depends on the quality and performance of the individual investments within it.

References

• Creating an Investment Portfolio
• Modern Portfolio Theory

Resources

• Investopedia