A portfolio is a snapshot of what investments you are currently holding on to. A portfolio lets you see your whole investment strategy at a glance. The best part about this snapshot is that you can better understand and manage how your money is spread across a bunch of different investments.
A portfolio is a window into your investments. You can see every asset in one spot, so that it is really easy to track. Think about it like a toy chest. You get to hold and see all of your goodies in one place.
Imagine you have a chest full of toys: some of them are costumes, stuffed animals, and maybe even some puzzles. The toy chest is your portfolio. You get to see all the things you own right in that chest. If suddenly costumes become more valuable, you might choose to sell your Elsa dress and crown. If one-day puzzles are really cheap to buy, you might grab a few more. Either way, you get to see everything together.
An investment is something you can buy and hold with the hope that it will make you money. Like a seed, it needs time to grow into a tall tree or produce delicious fruit. But like plants, it's no guarantee that things will go as planned. Through diversification, buying a bunch of different things increases your chances of some of those "seeds" doing well, even if others don't.
A stock is a little piece of a much bigger company. Imagine that a company is a castle made out of Legos. A stock is like one Lego piece in that castle: When you buy the stock, you own that piece of the company.
A bond is like an "I owe you" (IOU) from a company or government that can be traded on the market. When a company needs money, it can sell bonds to people like you and me. They "borrow" this money from you, hoping that your investment can help grow the company. You make money if they pay you back with interest over time. The interest rate on each bond is different. More risky bonds have a higher interest rate, since it is more likely that they won’t pay back on time and lenders need to charge a higher rate to make up for potential losses.
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This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action. This information is neither individualized nor a research report, and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals.