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Types of investment portfolios

Types of investment portfolios

Types of investment portfolios

Investing starts with a choice. You decide that you want to profit from securities. You want to take it seriously, and that involves creating a sound investment portfolio.

The investment portfolio is a set of assets (securities of different duration, economic direction, and liquidity) belonging to one investor or one management company.
Your investment portfolio may consist to some extent of high-risk investments with bonds and long-term assets relying on dividends.
Or, vice versa, a large portion of the assets in your portfolio may have high risk, volatility, and liquidity. You can reduce the risks of financial losses by compiling a portfolio of stocks of several companies.

In general terms, a portfolio can look different for an investor:

  • A growth portfolio. Here the focus is chosen on stocks that are rapidly increasing in price in the market. The goal of the investment is to profit from the sale of stocks at the top of growth positions, rather than a steady income from dividends;
  • Income Portfolio. The goal is to get high dividend payouts. This is the choice of the more conservative investor. Large-company securities with moderate appreciation and low volatility are bought. Bonds with a good coupon yield are also suitable;
  • A risk capital portfolio consisting of stocks of startups, high-tech companies, and products. Expect rapid growth in the value of the company’s shares and the ability to sell them quickly at the right time or for a permanent passive dividend income in the future. A risk capital portfolio may be a separate financial instrument, the burning of which will not affect the life and financial performance of the investor;
  • Balanced Portfolio. In financial planning, it is not advisable to rush to extremes and have an unambiguous position on the type of portfolio. An effective investment portfolio can consist of securities of varying potential yields, exchange rate values. Some may generate moderate returns, while others are held by the investor in anticipation of a rate hike. The portfolio owner chooses assets based on his or her risk attitude, payback period, and desired return;
  • A portfolio of short-term assets (highly liquid stocks);
  • A portfolio of long-term assets. This portfolio gathers securities of large companies or bonds of public funds with a long circulation period. A long-term income portfolio is assembled for more than five years. The investor in this case invests money in his future and does not think about high profits in the short term, speculation on the stock market, or abrupt positive or negative changes in the market;
  • Regional Portfolio. It includes securities of a separate state subject, for example, a region. An investor may be interested in expanding his sphere of influence through the purchase of shares, geographical proximity to the company’s instruments and resources, etc. ;
  • Specialized portfolio. Such a portfolio consists only of special instruments of the futures market (options, futures). It is assumed that an investor owns these financial instruments. He has to concentrate his investment activity only on them;
  • Industry portfolio. If an investor is interested in a particular economic sector, such as thermal power or mining and minerals sales, he may put together an industry-specific investment portfolio for himself, in which all assets will fall within that spectrum. This will be useful if an investor is deeply immersed in a particular economic sphere, feels its fluctuations, and can make predictions based on the analysis of events;
  • A portfolio of foreign stocks. Some investors are interested in foreign companies, and they want returns strictly in currencies (euros, etc.).

Types of portfolios by risk level:

 

Conservative Portfolio:

  • Corporate bonds – 35%
  • OFZ – 40%
  • Blue chips – 25%

Aggressive portfolio:

  • Shares of small and medium-sized companies – 50%
  • futures – 20%
  • blue chips – 30%

Moderate Portfolio:

  • Corporate bonds – 40%
  • blue chips – 30%
  • Shares of small and medium-sized companies – 20%
  • FEDERAL LOAN BONDS – 10%

Keep a balance between risk and return of securities, it does not depend on your investment goals.

While the most popular financial instruments for 2021:

  • The Boeing Company (VA)
  • Yandex (YNDX)
  • Amazon (AMZN)
  • Apple (AAPL)
  • Microsoft (MSFT)

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