A portfolio is a briefcase that is mainly used for storing and transporting documents and papers. The term, which derives from the French portefeuille , is also used symbolically to refer to that which is used to store or transport something.
An investment , on the other hand, is an operation that is carried out to profit from a financial asset . Through investments, resources are used strategically with the objective of obtaining profits within a certain period of time.
An investment portfolio or investment portfolio , in this framework, is a combination of assets . The person decides to invest simultaneously in different assets, generally both variable income and fixed income, and thus creates his or her portfolio.
The main advantage of the investment portfolio is risk diversification . By not allocating the money to a single resource, the subject does not tie his luck to a single investment and thus has more possibilities of resisting possible adverse results.
According to finance experts, an investment portfolio should be developed with at least five different assets and no more than twelve. The characteristics of the portfolio, however, will depend on the investor's profile and their greater or lesser risk tolerance .
An investment portfolio can include stocks , bonds , currencies and commodities , to name a few options. These assets must be managed carefully to make purchases and sales at the right time, maximizing profits and minimizing losses.
There are many tips to maximize the profitability of an investment portfolio, but each person must evaluate and test the ones that fit their needs until they find the most suitable ones. One of them, often cited as the first step, is determining your ideal asset allocation . It all starts with evaluating our own financial situation to design a plan with the objectives we want to achieve.
Some of the parameters to take into account that experts recommend are the following:
* : our age and the time that will be necessary for the growth of our investments;
* : the amount of capital that we can invest;
* : the income we will need in the future.
Although everyone knows their own financial needs, it is not so common that we stop to evaluate every detail of our income and expenses; However, it is ideal before undertaking an activity of this type. Once we have studied our situation in depth and determined our goals, it is time to prepare the portfolio .
Some of the steps to follow at this stage are the division of stocks and bonds, the classification of different assets and the analysis of the potential and quality of the investments we buy. Before proceeding to allocate a portion of capital in shares, we must inform ourselves about issues such as the sector, the market, price fluctuations and the situation of the company that interests us. Regarding bonds, their type, rating, maturity date and general interest rate are some of the fundamental points.
Successfully carrying out an investment portfolio does not simply consist of a solid planning stage, but rather constant monitoring. We must be prepared to adjust or change our strategy at every step if we see that the results are not what we expected. At this point the taxes on each of our movements come into play, which often push us to change our decision on the fly to maximize profits. It is recommended to follow publications from reliable analysts to benefit from their research before making important decisions.