What is an investment portfolio?

An investment portfolio is defined as a collection of financial assets held by an individual or institution. This can include a variety of investment vehicles such as stocks, bonds, mutual funds, real estate, and other financial instruments. The main purpose of having a portfolio is to diversify investments, thereby spreading risk across different asset classes and potentially improving overall returns.

By holding a range of investments, individuals or institutions can better manage market volatility and reduce the impact of any single investment's poor performance. This approach reflects a strategic process where the investor decides on asset allocation based on their financial goals, risk tolerance, and market outlook. This diversity is crucial in achieving a balanced investment strategy that can adapt to changing economic conditions.