What is Portfolio?

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A portfolio is a collection of various assets owned by an individual to achieve their financial goals. There are many different types of financial assets that you can include in your portfolio today, including equity shares, mutual funds, debt funds, gold, property, derivatives, and more.

Types of Portfolio

A Hybrid Portfolio

In a hybrid portfolio, asset classes are diversified. A hybrid portfolio typically includes stocks, bonds, commodities, real estate, and even art.

The Aggressive Portfolio

As the name implies, an aggressive portfolio is aggressive because it seeks more significant returns and frequently takes more enormous risks to reach this goal. In general, this portfolio contains several high beta stocks. When compared to the broader market, these stocks exhibit more volatility. 

The Defensive Portfolio

A defensive portfolio, on the other hand, does not include equities with a high beta value. Such stocks are primarily undisturbed by market changes. These stocks are relatively safe to invest in since they contain little risk. They neither provide extravagant gains during upswings nor fall disproportionately during business cycle lows.

The Speculative Portfolio

The speculative portfolio necessitates a high-risk tolerance, so much so that it is sometimes equated to gambling. The portfolio is not only aggressive in this case, but it is also a wager on what product or service offering may function exceptionally well in the future. Speculative portfolios include Initial Public Offerings (IPOs) and takeover targets.

The Income Portfolio

An income portfolio seeks to profit from dividends or other recurring advantages presented to owners. Though it shares many similarities with a defensive portfolio, one key distinction is based on equities with higher yields.

How to Calculate Portfolio Rate

The ROI of a given investment is computed by dividing the asset’s net price gain by its original cost. The cost of an asset comprises the purchase price and any commissions, maintenance fees, or other expenditures incurred due to the acquisition. The resultant fraction shows the increase in value as a percentage of the asset’s purchase price.

Although it is not a precise science, this is a rough estimate of how effective investment is compared to a whole portfolio.