What is a Portfolio? - Pinetree Securities

What is a Portfolio?
Lesson November 3, 2022

What is a Portfolio?

What is a Portfolio?

Definition

A portfolio is a collection of financial assets, such as stocks, bonds, cash, real estate, or alternative investments.

Understanding a portfolio

A portfolio is a window into your financial life, providing a breakdown of how you’ve decided to allocate your money. For many people, a portfolio is a collection of stocks, bonds, and cash. But more broadly, it can include other assets, like foreign currencies, gold, art, real estate, or investments in private companies. Many factors can influence how you design your portfolio, including how much risk you’re willing to take and how long you plan to own each asset.

EXAMPLE
Let’s say a person wants to invest $1,000, and they want to spread it across different asset classes. First, they might purchase $250 in Apple stock and $150 in Nike. But, if they’re concerned about depending on the performance of just two companies, they might broaden their selections. The investor could also buy $330 in municipal bonds and $270 in an index fund tracking the S&P 500 to round out their portfolio. In this instance, the investor would have 67% of their portfolio in stocks ($670) and 33% in bonds ($330) for a total of $1,000.

Source: Robinhood

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