There are a lot of everyday words and phrases used in finance that you probably already know. If you are new to the world of money and investing, you may hear the word “portfolio” a lot. A Financial Investment Portfolio is a portfolio of investments is a group of securities. It includes mutual funds, US stocks, Indian stocks, alternative assets, digital gold, and many others.
It’s like putting different investments of different sizes into a shopping cart. Each investment has its own function, taste, and color (diversification).
What Kinds of Investment Portfolios Are There?
Most income portfolios are made up of stocks that pay dividends, like Intel or Johnson & Johnson, and bonds that can give you a fixed income through coupons.
People often think that income portfolios are the same as regular cash-generating portfolios. They aren’t, though. The reason is simple: dividends and coupons are automatically put back into the company.
If you want the dividends to be sent to your bank account, you’ll have to pay a dividend tax. But because the company promises dividend and coupon payments, they are less likely to change than future stock prices.
On the other hand, alternative investments like asset leasing, P2P lending, and consumer loans through merchants can give you monthly cash payments that are directly deposited into your bank account.
Diversification comes into play here. Depending on your risk profile, your portfolio can have different amounts of both market-linked assets and non-market-linked assets.
The main goal of a growth portfolio is capital growth, which means that the value of the portfolio as a whole goes up. Stocks that pay dividends are not usually part of a growth portfolio.
Instead, portfolio asset allocation is about buying shares in companies that have a good eye for growth, a strong balance sheet, and a good sense of where they want to go. Large-cap and mid-cap stocks are a natural fit.
A growth portfolio could also include large-cap, mid-cap, and flexi-cap mutual funds, as well as Exchange Traded Funds (ETFs).
The famous value investing method made famous by Warren Buffett. The idea is to put money into companies that have a strong balance sheet but are trading for less than what they are really worth.
There’s a chance that the markets haven’t caught on to these stocks’ potential yet, or that investor sentiment has been swayed by something else. As a result, these shares may be trading for less than what they’re really worth.
A value portfolio can include stocks and funds from big, medium, and small companies, as well as ETFs.
Overall, the goal is to keep these investments for a long time and get returns from both dividends and capital growth. A Financial Investment Portfolio is very important for investor.