Investment Portfolio
The total number of assets that an individual or an institution owns form the investment portfolio. An investment portfolio can include hard assets such as bars of gold, real estate, bonds, debentures, exchange traded funds, stocks, money market funds and mutual funds. According to studies, it is always advisable to have a balanced portfolio in order to have a greater impact on the log term performance. In order to reduce the unpredictability of your investment portfolio, you can add alternative assets like real estate, in which the market tracking isn’t required.
It is good to keep a regular check on your investment portfolio, at least once a year. When any significant change occurs in your financial circumstances for instance, when you get an increment or when you lose your job. Every now and then you should reconsider and re-balance your investments.
Portfolio Diversification
Diversification refers to the act of achieving and maintaining variety. Portfolio diversification can be defined as an act of combining different varieties of assets with the aim of reducing overall risk of your investment portfolio. The aim of portfolio diversification is optimization and risk management. To say it simply, the best way to reduce risk is to invest in varied companies, assets and industries.
