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Smart Investor Portfolio
What is the investor portfolio, its types, and the optimal way to diversify investments?
The portfolio of a trading account is simply a collection of financial assets owned by the trader or investor with the goal of achieving a return over time, while trying to minimize risks as much as possible. These assets can include stocks, bonds, currencies, commodities, mutual funds, or even real estate and gold, and they are distributed according to your investment goals and your level of risk tolerance.
This means that whether you are managing your portfolio yourself or through a financial manager, the goal of the portfolio is to diversify your investments so that if one asset loses, the rest can compensate you.
Choosing the right type of portfolio depends on 3 main factors:
1. Your investment goal: Is your goal quick profits? Or do you prefer stable and steady income? Or are you looking for long-term investment?
2. Your risk tolerance: Can you withstand temporary losses for a chance at higher profits? Or do you prefer safety even if the profits are lower?
3. The time frame: Are you planning to invest for a short period (a year or less), or are you willing to hold your investments for years?
For example:
- If you are young and looking for rapid growth and are ready to bear some losses
- If your goal is safety and regular income
- If you have a small amount and want to try your luck and allocate a small portion for speculation
In the next article, we will learn about the most important types of portfolios and what is the best diversification for the portfolio
