A portfolio is money you have that isn’t in a checking or savings account. If you have a 401(k) or a 501(b) you have a portfolio. Usually when people refer to a portfolio they are referring to stocks, but also bonds, money market accounts and other investments.

Keep Your Balance
A “balanced portfolio” or a “diversified portfolio” is one that doesn’t have just stocks or just bonds in it. It will have some higher risk investments as well as lower risk investments. The balance helps you feel you might make a lot of money from the higher risk investments while letting you sleep at night knowing all of your money isn’t in high risk investments.

How risky your balanced portfolio is based on a few factors:

1. How long it’s going to be in between now and when you retire.
2. Your health. (You might have to have guaranteed options like an annuity if you have health problems).
3. Number of dependents, an elderly parent, other family issues, etc.

About Risk
When you are twenty and not planning to retire until you’re 60 (or even 70 or more) you can be in high risk stocks, because if you lose it all you have more than enough time to start over. If you’re 50, well, you’re closer to retirement age and should not have such a risky portfolio.

Send your questions about finances and investing to jen@jennydecki.com and I’ll be happy to mix research with knowledge and cook up a great answer for you!

Image Source: by Gurney