5 Popular Investment Portfolio Types
October 6, 2021
What are the popular investment portfolio types?
- Defensive portfolio
- Income portfolio
- Aggressive portfolio
- Speculative portfolio
- Hybrid portfolio
If you’re researching where to invest next, then you might have encountered the term “investment portfolio”. It’s a set of financial assets that an investor uses to earn a profit. It might contain stocks, bonds, and other alternative investments. Depending on your financial goal and risk tolerance, there are 5 investment portfolio types that might suit you. Read on.
From the name itself, the defensive portfolio includes assets that involve minimal risk. These have better chances of weathering economic downturns so your investments will be safer in the long run. But on the other hand, you can’t expect high returns too. Because of this, this type of portfolio is recommended for medium to long-term investors looking for stable investments.
If you’re looking for assets to include in your defensive portfolio, think of the essentials you use in your daily life. Look for companies that make these products.
An income portfolio is for investors who want to earn money from dividends instead of focusing on potential capital gains. Dividends are a portion of the company’s earnings that it gives to its shareholders.
An income portfolio can have stocks that are found in a defensive portfolio, but the main difference is that the yields are higher. If you’re looking for assets, look for stocks that offer above-average dividends.
Have you ever heard of the saying “high risk, high rewards”? This concept best describes an aggressive portfolio. The assets included in this undergo higher fluctuations compared to others. The shares can quickly move up or down, so your money is exposed to high risks but also high rewards.
Aggressive portfolios are mostly recommended for young investors because losses experienced early have less of an impact on the overall investment career. When handling this, it’s important to have an active management strategy because it’s a highly volatile investment.
Compared to an aggressive portfolio, a speculative one is often compared to gambling. This is because you need to bet on products and services that have the potential of working in the future. Examples are investing in companies that work on advanced technologies.
A speculative portfolio requires an appetite for high-risk. Extensive research and understanding of the companies you’re investing in are also vital.
If you’re looking for flexibility in your investments, then a hybrid portfolio is recommended for you. This often includes a mix of stocks, bonds, real estate, and other assets. This type of portfolio often has assets that can help you to both achieve growth and gain income through dividends. If you’re looking for a diversified portfolio, then a hybrid portfolio is your best bet.
Investing requires research, planning, and commitment. Before you pour your money into stocks, bonds, or other assets, make sure that you know the company, product, and service you’re investing in. This will play an important factor in what you can add to your investment portfolio.
If you need more information about the different investment portfolio types, you can send a message to Benito Keh. As a successful businessman, he can advise you about the type that will suit your risk appetite and financial goals.