What is a portfolio? How can investors reduce investment risk by constructing an investment portfolio?

A portfolio is a collection of something: An artist may have a portfolio of his art works, a model may have a portfolio of photos, a consultant may have a portfolio of clients, and an investor may have a portfolio of securities.

An investment portfolio is constructed to reduce risk by including in it a variety of securities, whereby a stock that goes down in value is offset by other stocks that go up in value. Stocks in volatile industries are offset by stocks in stable industries. Risky stocks are balanced by secure bonds. Risk is reduced by holding a portfolio of diversified investments.

A portfolio is a group of asset holdings or securities. A portfolio should be constructed with enough diverse holdings or asset classes so they have different levels of correlation among each other and a variety of volatility components. For example..some fixed income,money market,US Value and growth compaanies or funds with international companies (funds)and exchange-trade funds mixed in with REITS and a utility may be an example of a diversified investment portfolio.

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A financial portfolio is a collection of investments. You can reduce risk by diversifying a portfolio, meaning that you include different types of asset classes, so that not all of your savings are concentrated in any one type of investment.