Portfolio
A collection of financial investments including stocks, bonds, cash, real estate, and other assets held by an individual or institution. The composition reflects the investor's goals, risk tolerance, and time horizon.
A portfolio is more than a random collection of investments—it is a deliberate combination designed to achieve specific financial objectives. The key insight of modern portfolio theory is that the risk and return characteristics of a portfolio can be meaningfully different from those of its individual holdings.
Building a Portfolio
Constructing an effective portfolio involves several decisions:
- Asset allocation — The mix of stocks, bonds, and other asset classes
- Security selection — Choosing specific investments within each asset class
- Ongoing management — Rebalancing, tax-loss harvesting, and adjusting to life changes
A well-constructed portfolio matches your risk tolerance and investment timeline. Most financial advisors recommend starting with a core allocation to broad-market index funds, then adding specialized holdings as needed. For a step-by-step approach, explore our asset allocation guide.