A portfolio refers to the sum of securities held by the same person or organization. Individuals or organizations create a portfolio using different securities and various types of investment tools. The portfolio consists of single or maximum two assets deposited. The main purpose of creating a portfolio is to determine the risk tolerances of investors and to guarantee their financial benefits.
Each investor’s risk tolerance is different. For this reason, investors create their portfolios according to the risks they can take. Some investors like to take risks and make investments for a single asset. However, some investors avoid risk and direct their assets to two or more assets, in which case a portfolio is formed.
The portfolio can be created by investing investors in assets with the same or different characteristics. For example, when creating a stock market investor portfolio, it can buy the stocks of companies in different sectors and buy stocks of different companies in the same sector. If we extend the sample a little more, an investor who divides a part of its assets from the shares of certain sectors can also assess a certain portion of its assets in bonds, bills or various funds. In this case, the investor reveals and manages his own portfolio.
Thanks to the portfolio, individuals or organizations try to diversify their investments and distribute risks. You may think; If the only water tester in your hand breaks, there is no other test that you can put water in at the moment, but if you go to fill the water with two water jugs, you can put water to another even if one is broken. So, for example, keeping your investment portfolio wide will reduce potential risks.
Portfolio diversification provides advantages such as distributing risks. However, there are some disadvantages such as the necessity to manage more investment vehicles after diversification and the necessity of further analysis.
What is essential here is that every investor has a portfolio. Each investor can create and manage his own portfolio and manage his / her investments through the companies that create and manage portfolios in the same way.