Portfolio Investment

Reviewed by Apoorva | Updated on Sep 30, 2020

Introduction

A portfolio investment is a passive investment of securities in a portfolio made with the expectation of earning a return. The returns earned are directly proportional to the risk involved. There are additional return calculations, such as money-weighted returns.

Understanding Portfolio Investment

A portfolio investment is a strategic investment process. Portfolio investment differs from direct investment as the latter takes a sizeable stake in a target company and incurs day-to-day management.

Factors to Consider

  1. The composition of investments in a portfolio may depend on a number of factors, such as investment horizon, investors risk tolerance, and the amount invested.

  2. A young investor with limited funds can choose mutual funds or exchange-traded funds as they may be the appropriate portfolio investments.

  3. For a high-net-worth person, it includes commodities, real estate, and timber.

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