Written by Charlotte Wood (last updated February 21, 2009)
When I hear the word portfolio, my mind jumps to memories of elementary school art projects, high school poetry collections, and college writing samples. Well, the world of money has its take on the word portfolio as well. The basic definition is the same for all kinds of portfolios: a collection of your own work. You can have an art portfolio, a music portfolio, a writing portfolio, any kind of portfolio, and finances are no different.
A financial portfolio is essentially all the financial assets you have. Almost everyone has some kind of portfolio, whether that be a simple savings account or great numbers of stock shares, it's all combined into your own portfolio. Really with a portfolio, you'd have it readily accessible either on a computer program or in actual paperwork, but the point of any portfolio is to have all your work or assets accessible in one place. So with your financial portfolio, you ideally would have all your accounts, all your investments, and all your other assets in the same place so you can access it all at once.
Most people who actually have a real portfolio (i.e. not just accounts or smaller finaicial things), are investors and use their portfolio to assess their various investments. If you buy a certain amount of shares in one company and another amount in another, then your portfolio is that combined amount of stock shares you own. Portfolios are a means of looking at your monies and assets in one place; you can evaluate where you are in your finances and what should be changed from day to day, week to week, month to month, year to year. It's a way of keeping your finances and investments stable and maintaining control over them.
You probably don't need a formal or official portfolio if you want to stick to savings and checking accounts and certificates of deposit, but if you're looking into investing or even if you already have investments, you should create a portfolio, because that way you won't lose track of where you are and where your money is. Investment portfolios are all about control of your money and especially if you have multiple investments, you want as much control as you can get.
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