What is a portfolio?
Like a big briefcase, your investment portfolio carries around all of the shares, bonds and other financial assets that you own, including cash and property.
Where have you heard about portfolios?
If you’ve ever taken any investment advice, or read any guides to investing, it’s likely that portfolios will have been mentioned, particularly when talking about managing risk.
What you need to know about portfolios...
What you put in your portfolio will usually depend on the amount of risk you’re willing to take with your money and the amount of time you want to invest for.
To spread risk and maximise your chances of getting good returns, you ideally want a portfolio that contains a mixture of different types of investments, or asset classes.
Spreading your money across investments like this is called diversification, and it’s the trading equivalent of not putting all your eggs in one basket.
A riskier portfolio might be suitable if you’re investing over a long period as you’ll have more time to weather the ups and downs of the markets. But if you’re nearing retirement, for example, you’ll probably want to look at assets that are safer.