Do not put all eggs in one basket! This may be the first thing you hear when talking about the investment portfolio. What is the relationship between the egg basket and the investment portfolio?
Putting all eggs in one basket makes it more vulnerable. If something happens to the basket, all the eggs are broken inside. As for distributing eggs to several baskets, it may ensure that some of them remain unharmed as well when building an investment portfolio. It is wise to distribute and diversify investments in them on assets that are not affected by the market in the same way. If a negative performance of some assets occurs, it is offset by a positive performance of others, thus reducing risks, and always remember that a portfolio that is built on one type of investment, for example, such as shares of companies from one sector, may lose a large part or all of the investments in it if this sector hits a recession or a crisis It will be the same as the basket that contains all the eggs.
The investment portfolio can contain stocks, bonds, commodities and cash, and the portfolio may also include real estate, gold and various collectibles in order to develop its market value.
There are many ways to diversify between assets when building a portfolio How do you do that?
It is up to you because defining your investment goal and goals for the future, along with your risk tolerance, are all factors that determine how you build your portfolio, however there are several types of investment portfolios, for example
Income portfolio
It aims to achieve the highest rate of regular cash income, so the focus is on bonds that achieve the highest interest in the least time, in addition to low-risk stocks that have regular cash dividends.
Defensive portfolio
Consisting of low-risk assets and stocks, this portfolio is of the safest type as it performs well in all trading seasons for example stocks of basic and daily life consumer goods companies that are not easily abandoned.
Speculative portfolio
It focuses on achieving quick and large returns while bearing significant risks. It is almost devoid of bonds, defensive stocks or safer investments and consists of stocks that are subject to large speculative operations.
In the end, whatever the type of portfolio, it is of all kinds that do not guarantee profit, but rather a way to manage risks.
Finally, I hope you will benefit from this article
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