Portfolio
Definition
A portfolio is a collection of financial investments owned by an individual or institution, including stocks, bonds, cash, and other assets.
Explanation
A well-constructed portfolio balances risk and return through diversification across different asset classes, sectors, and geographies. The mix of assets should align with your risk tolerance, time horizon, and financial goals. Portfolios can be actively managed or passively invested through index funds.
Regular rebalancing — selling assets that have grown and buying those that have declined — maintains your target allocation and manages risk.
Example
A balanced portfolio might be 60% stocks (growth), 30% bonds (income), and 10% cash (stability). A $100,000 portfolio would allocate $60,000, $30,000, and $10,000 respectively.