At a Glance
There are hundreds of possible investments in existence today. These investments have broader categories depending on their risks, benefits, and distinct characteristics. They include equities (shares), property (real estate), cash (savings, savings bond etc.), alternative investment (forex, hedge funds etc.), and fixed interest (bonds).
An investment portfolio is a combination of the various types of investment, depending on the preferences of an investor.
A simple example
Daniel, a lawyer based in BC, is planning to retire in a decade. He has set aside a list of investments that his financial advisor believes will offer him comfortable retirement.
Below is his investment portfolio, with each investment represented by its percentage of the total invested amount:
Company Shares: 40%
Cash Savings: 10%
Real Estate: 20%
What type of investment portfolio is best for you?
There is no one-fits-all type of investment portfolio. Individuals will maintain different investments in their portfolios based on things such as risk.
Investors that are less afraid of risk will generally be attracted to risky yet more rewarding investments. Those afraid of risk might find it easier to go with less risky investments which tend to offer lower returns. However, this will not be entirely the case with all investments.
To choose a good investment portfolio, you need to identify a competent financial advisor and talk to them about your financial plans. For example, when do you plan to retire? How much would you like to receive upon retirement? How much money is available for investment? Do you prefer a one-off investment or a periodic investment, and so on?
This information will enable an expert to recommend to you a range of investments to help you maintain a growing and profitable investment portfolio.