Starting out
Portfolio
Everything you own, considered as one thing rather than as a list of separate holdings.
How it works
The word carries an idea, not just a container. A portfolio is the level at which risk and return actually exist. One holding can fall by half without the portfolio being in trouble, and every holding can look sensible while the portfolio as a whole is one concentrated bet.
This is why the useful questions are portfolio-level: how much of the whole is in one name, one sector, one currency, one country. A list of good individual decisions is not automatically a good portfolio.
Where it misleads people
Judging holdings one at a time is the commonest mistake in the whole subject. Eight technology shares is one bet written eight times, and it will feel like diversification right up until the sector turns.
Related terms
- DiversificationSpreading money across things that do not move together, so no single failure can decide your outcome.
- Concentration riskThe risk that too much of your outcome depends on one holding, sector, country or currency.
- Asset allocationHow you divide money between asset classes — the decision that drives most of your long-run experience.
- PositionEverything you currently hold in one investment, however many separate purchases built it up.
More in Starting out
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.