A Primer on Investment Portfolios and Its Different Contents
Taking care of your finances is one thing, but knowing more about it is another story overall. You may be familiar with your investments and your monthly income—but if that’s the only information you have about your finances, then the chances are that you are missing out on other crucial details that may help with the overall growth of your money.
With all of that said, it might be the perfect time for you to have your very own investment portfolio. While it may sound a bit too technical for now, it actually makes sense to own one, especially if you have plans of “multiplying” your money for your future.
If you’re still unsure about what investment portfolios really are, look no further than the following facts and info.
What Is an Investment Portfolio?
Investment portfolios are a set or collection of financial assets owned by an investor. In this case, since you are the one building up your own portfolio, you are in the role of the investor. Now, there is actually a very good reason why it is called a portfolio, and that is because they contain more than one type of investment!
Keep in mind that investments come in many different forms, so don’t be surprised if you encounter one that is not entirely monetary in nature.
What Are the Usual Components of an Investment Portfolio?
An investment portfolio usually consists of several investments that may have been applied for, are currently ongoing, or have been a success in the past. While there are many to mention, we are going to list down some of the more common ones to give you an idea of what you can root for with your capital:
Bonds are considered a written agreement between you and either a government firm or a corporation. The agreement states that you will be given a specific amount of bonds in exchange for a loan. Basically, you are loaning money towards the government form or company for a set period of time, after which they will need to pay you back—plus interest.
This is a good type of investment, especially if you have an intuition as to which company or government agency is currently having an even flow of cash.
Stocks would enable you to own a piece of a company by having a fraction of its shares. This means that you will be given a proportion of the company’s profits and assets, depending on the number of stocks that they currently have.
This is another good investment, in the sense that if their numbers are doing good, so would you. However, the only risk is that if they are garnering losses, the amount of profits and assets you’d get would also plummet, so pick your preferred company wisely!
3. Exchange-Traded Funds
To understand what Exchange-Traded Funds or ETFs are, we must first learn about mutual funds. Basically, the latter is a form of investment that gathers money from investors in order to buy assets, bonds, and stocks. Now, ETFs are similar to mutual funds, except that they are traded on the stock exchange. The trading would last throughout the day and may require you the help of a stockbroker.
Investment portfolios are a good way of managing and tracking all your investments. While there are many of them to choose from, the different types of investments you have should give you an idea of how you were able to manage your initial capital. It doesn’t matter if your past investments were a success or a failure; what matters is you have a variety of them in your portfolio, well enough to give you an idea of the dos and don’ts in your future ventures.
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