For building a successful investment plan in twenty-first century we need a better investment strategy to maximize the profit and minimize the risk. For all these we must have the knowledge about a better portfolio, and in this post we are going to discuss the same.
What is Portfolio?
Portfolio is an appropriate mix of or collection of investments held by an institution or a private individual.
In other words a Portfolio is a combination of different investment assets mixed and matched for the purpose of achieving an investor's goal(s). Items that are considered a part of your portfolio can include any asset you own-from shares, debentures, bonds, mutual fund units to items such as gold, art and even real estate etc. However, for most investors a portfolio has come to signify an investment in financial instrumentslike shares, debentures, fixed deposits, mutual fund units.
What is Portfolio Management?
Portfolio Management is the art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk vs. performance.
What is Portfolio Diversification?
It is a risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Diversificationis possibly the best way to reduce the risk in a portfolio.
What are the advantages of having a diversified portfolio?
A good investment portfolio is a mix of a wide range of asset class. Different securities perform differently at any point in time, so with a mix of asset types, your entire portfolio does not suffer the impact of a decline of any one security. When your stocks go down, you may still have the stability of the bonds in your portfolio. There have been all sorts of academic studies and formulas that demonstrate why diversification is important, but it's really just the simple practice of "not putting all your eggs in one basket." If you spread your investments across various types of assets and markets, you'll reduce the risk of your entire portfolio getting affected by the adverse returns of any single asset class.
Thanks for reading. We hope this was informative to you. Read Investment Related more articles.
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