portfolio
A collection of financial investments held by an individual or institution.
Example
“His portfolio included stocks, bonds, real estate, and some cryptocurrency.”
Memory Tip
PORT-folio — you CARRY (port) a collection (folio) of investments.
Why It Matters
A well-constructed portfolio helps you balance risk and potential returns based on your financial goals and time horizon. Understanding how to build and manage a portfolio is essential for building wealth over time and protecting yourself from losing everything if one investment performs poorly.
Common Misconception
Many people think a portfolio must contain only stocks or only bonds, when in reality a strong portfolio typically includes a mix of different asset types. Another mistake is believing that a larger portfolio automatically means better returns, when what actually matters is the right combination of investments for your specific situation.
In Practice
Suppose you have 50,000 dollars to invest and you are 35 years old with 30 years until retirement. You might build a portfolio with 30,000 dollars in stock index funds, 15,000 dollars in bonds, and 5,000 dollars in real estate investment trusts. Over time as you age, you would gradually shift toward more bonds and fewer stocks to reduce risk as retirement approaches.
Etymology
From Italian 'portafoglio' meaning 'to carry papers' — originally a case for carrying documents, now a collection of investments.
Common Misspellings
Start investing with no commission trades
Related Terms
More in investing
Other investing terms you should know
See Also
Need financial definitions?
Clear definitions for 2,500+ finance, insurance, and investing terms.