You might have heard about Portfolio. It is a combination of different investments. For example you portfolio size is Rs 100000 within which you may keep Stocks = 50%, bonds = 20%, fixed deposit = 20%, liquid cash = 10% or any other combination. Combination is choosing accordingly so that you achieve your target with limiting risk.
Diversification means, keeping different types of investments of different percentage. Different investment may perform differently in different situation, i.e. one may go down or one may go up. If you keep different combinations, then you may safe guard your safe from declines. Because, if one of your investment fails other one may succeed. You can invest in equity, mutual fund, bonds, fixed deposit etc. Portfolio diversification is very important in risk point of view.
Normally portfolios are classified in two types.
Aggressive portfolio: Those who aim on high return and in turn take high risk. Higher investment in stocks or equity.
Conservative Portfolio: Those who avoid high risk and in turn get lower gain. Lower investment in stocks or equity. Depending on individuals personality, charters tics, behave to different situation, financial stability portfolio becomes aggressive or conservative.
Diversification means, keeping different types of investments of different percentage. Different investment may perform differently in different situation, i.e. one may go down or one may go up. If you keep different combinations, then you may safe guard your safe from declines. Because, if one of your investment fails other one may succeed. You can invest in equity, mutual fund, bonds, fixed deposit etc. Portfolio diversification is very important in risk point of view.
Normally portfolios are classified in two types.
Aggressive portfolio: Those who aim on high return and in turn take high risk. Higher investment in stocks or equity.
Conservative Portfolio: Those who avoid high risk and in turn get lower gain. Lower investment in stocks or equity. Depending on individuals personality, charters tics, behave to different situation, financial stability portfolio becomes aggressive or conservative.
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