Many people are hesitant to invest, mainly because they don't know how to start. In fact, building a personal investment portfolio is not complicated; as long as you understand a few core principles, beginners can easily get started.
What exactly is a personal investment portfolio?
To put it simply, a personal investment portfolio is a collection of various financial assets you hold simultaneously in certain proportions. These assets include stocks, funds, bonds, bank deposits, and even cryptocurrencies. The main purpose of creating such a portfolio is to balance risk and return through asset diversification.
Imagine if you invest all your money in a single stock; if that stock drops, your losses could be severe. But if your money is allocated across stocks, funds, bonds, and other assets, even if one declines, the gains from other assets might offset the losses. This is the beauty of a personal investment portfolio.
In simple terms, building a personal investment portfolio is like having a balanced diet when eating.