It is important to know and understand the terms of any investments so when they are used you are familiar with them. Knowing what they mean will help when you need to discuss your investments, you will be aware of any terms that they are using.
The portfolio is a collection of financial assets that are held in a customer’s name. The collection can include many different products from bonds to stocks and shares.
It is a way to keep a track of all the products that you have money invested in, and it is a way to ensure that the portfolio is working as a group of investments to take into consideration the risk that the customer is willing to take with their money.
If you are not keen to be involved in high risk options then it is more than likely that you money will be invested in the less risky options of bonds than stocks and shares.
All investment in stocks and shares come with a risk and this will depend on the performance of the shares as to how risky it is to put your money in. The risk means the likelihood of losing the original investment; you can lose money as well as make money. But this is a long term investment; you really need to be thinking of at least five years without touching the money.
Your portfolio can be held by yourself or by the person that you choose to place your investments with, this can be a bank, financial professional, or a hedge fund manager. They will all do similar jobs for you they will check the markets and place any new investments into products that fit with your risk assessment.
When you are looking at the return that you want to get from your investment this will help you to decide what you want to do in relation to the risk factor. If you are placing money into your portfolio and you feel that you want to have a low risk, then the products that will be purchased on your behalf will have a low risk of losing the initial investment. But this will give lower returns and your money will not have worked so hard for you.
If you feel that the risk is worth it then you will purchase a more high risk item but the return is normally predicted at a higher percentage and this will mean that if the risks works out you will have made an improvement on your original investment and your money will have worked harder for you.
Therefore, if you have a basic understanding of what you are looking for in your own portfolio then when you talk to the financial person that will deal with your portfolio you will be able to understand there questions and you will be able to have an input as to what you are looking to invest in. Learn to manage your risk and grow your money.