Glossary · Defined term
Portfolio
A portfolio is the complete collection of investments owned by an individual or institution. Definition, how it is built, and a simple example.
Last updated Oct 2, 2026
What it means
A portfolio is the complete collection of investments owned by an individual or institution, spanning stocks, bonds, funds, cash, and sometimes real assets. Its risk and return depend on how the holdings combine, not just on each piece in isolation: assets that zig when others zag can smooth overall results. Building a portfolio involves asset allocation, deciding how much sits in each category based on goals, time horizon, and tolerance for losses. Portfolios need occasional rebalancing, since winners grow to dominate unless trimmed back. A portfolio is the unit investors should judge, rather than obsessing over any single holding.
An example
For illustration, an investor holds 60 percent in stock funds and 40 percent in bond funds. After a strong year for stocks, the mix drifts to 68 percent stocks and 32 percent bonds. Rebalancing means selling some stock funds and buying bond funds to restore the 60/40 target, because the portfolio, not any single fund, is what the allocation describes.