Fundamentals
Portfolio
The complete collection of investments held by an individual or institution, including stocks, bonds, cash, and other assets.
Example
A simple portfolio might be 70% in a stock index fund, 25% in a bond fund, and 5% in cash — the specific mix, not any single holding, is what determines most of the portfolio's overall risk and return.
Common Misconception
A portfolio's risk isn't just the average of its individual holdings' risk — how those holdings move relative to each other (correlation) matters just as much, which is the whole logic behind diversification.
Why It Matters
Thinking in terms of the whole portfolio, rather than any one position, is the basis for asset allocation decisions like how much to hold in stocks versus bonds at different life stages.