Portfolio Investment
Candlefocus EditorPortfolio investing is easy compared to individual stock investment or a direct investment in a company. It's also often the preferred approach to investing for a larger-scale investor who has a relatively large sum of money to allocate to the market. The idea behind portfolio investing is to try to spread out the risk associated with any single investment. For example, an individual who wants to make an investment might purchase shares of several companies, each in a different industry, with the hope that, if one company fails, the others will fare better and help their portfolio achieve its aim.
Typically, an investment portfolio is diversified in such a way that it is composed of different types of investments such as stocks, bonds, commodities, mutual funds and real estate. Each type of investment is chosen to add different risk-reward scales to the portfolio. As a patient, but active, investor, portfolio investments can generate large returns over a longer period of time.
The portfolio itself may be more conservative or more aggressive depending upon the goals and outlook of the investor. A more conservative portfolio could be composed mainly of fixed-income investments and have a longer time horizon, whereas a more aggressive portfolio could include more volatile investments such as derivatives and have a shorter time horizon. The strength of a portfolio investment depends on the investor’s ability and willingness to research and monitor the investments, determine the investors’ risk appetite, and make timely decisions about when to buy and when to sell.
With careful research and constant evaluation of market conditions, portfolio investments can be a lucrative way to make money. Professional portfolio investment advice can prove invaluable in helping the investor create and maintain a portfolio that will yield returns even during difficult market conditions.