What is an investment portfolio
An investment portfolio is something that is set up by an investor, for the purpose of making a profit. This is achieved by investing in different investment strategies for the purpose of increasing the original value of funds. The purpose of an investment portfolio is to increase the chances of making a significant return.
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Creating an investment portfolio
An investment portfolio something that is established for the purpose of an individual, company or financial institution. These entities can invest in a portfolio manager, who is a financial professional responsible for managing the assets of that individual within an investment portfolio. An investment portfolio can also be managed by a hedge fund, bank or other financial institution.
An investment portfolio is a collection of financial assets that can include anything from stocks, bonds and cash, although modern day investment portfolios are far more diverse to accommodate for alternative investment strategies, such as artwork, antiques and other collectibles.
When setting up an investment portfolio, the portfolio manager will ascertain the amount of risk the investor is willing to take, the time frame in which they would like to make an investment along with their investment objectives. This will influence the arrangement of the portfolio and its risk to reward ratio. Some investors want a short-term solution to making an investment, whilst others who are looking for a long-term investment strategy will have a completely different investment portfolio arrangement.
There are many types of portfolios and portfolio structures. These are chosen on a different risk-reward combination: low-risk, low-yield; high-risk, high yield; steady but fixed and variable with potential for growth.
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