By Tarun Gopinath. Edited by Arjun Chandrasekar.
Overview
A portfolio is a collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including closed-end funds and exchange traded funds (ETFs). A portfolio may also contain a wide range of assets including real estate, art, and private investments (Investopedia).
There are many types of portfolios one could have but the main four are, a hybrid portfolio, a portfolio investment, an aggressive equities portfolio, a defensive equities-focused portfolio, etc.
Hybrid Portfolio
This is a portfolio that is diversified across different assets. Building this portfolio requires taking positions in stocks, bonds, commodities, real estate, art, etc. Usually a hybrid portfolio have relatively fixed proportions of stocks, bonds, and other investments
Portfolio Investment
This is a portfolio where you expect the stock, bond, or another investment to earn a return or the value grows over time. These portfolios may be strategic, holding on to the assets for the long term, or tactical, actively buying and selling the assets hoping for a short-term gain.
Aggressive, Equities-Focused Portfolio
This is a portfolio that contains assets that have a huge risk, with high returns Aggressive investors seek out companies that are in the early stages of their growth and have a unique value proposition.
Defensive, Equities-Focused Portfolio
This portfolio contains less riskier investments that tend to focus on essential items that are impervious to downturns. Defensive stock will do well in bad times and good times, no matter the state of the economy.
Conclusion
Depending on what type of person you might determine what type of portfolio you might want to use. No matter the portfolio there is always one rule. Never put your eggs in one basket, meaning, rather than investing in one asset, invest in multiple and diversify your portfolio. This will reduce your risk significantly, if things go wrong with your one asset, you may be in trouble. There are various ways you can diversify your portfolio, it is up to you. As said before, it is all based on the type of person you are.
