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Portfolio

When an institution or an individual amasses a collection of investments, the aggregate whole is referred to as a "portfolio." Normally when working with a professional financial advisor, investors will be counseled to achieve a degree of portfolio diversification as a strategy to reduce risk. Diversification refers to the process of owning a variety of asset types rather than "putting all your eggs in one basket."

A diversified portfolio usually includes a mixture of stocks, bonds, and mutual or money market funds. A portfolio may also include such investment vehicles as options, warrants, real estate, futures contracts, and gold certificates among others. Different financial professionals will offer varying analyses of appropriate diversification strategies usually designed to fit an individual investor's investment goals and degree of risk tolerance.

Portfolio management refers to the process of managing the assets within the portfolio through sales and purchases to stay abreast not only of investment goals but of prevailing economic conditions.

More Glossary Terms Explained here


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