Portfolio 101

I think most financial markets (Stock exchanges) are now recovering from the losses that they have encountered last year during the financial crisis. You can take a look at this chart to see where I got this information from. Maybe its a good time to enter the market , maybe not . I’m not selling an advice here , I just want to explain the concept of portfolio as you will discover later on.You have $5000 – maybe more -in your pocket , and you want to invest your money in those markets . So you start to think which company or which equity (what I mean by equity is any thing( stock , bond or option) that is being bought or sold in the stock market) , you might think about investing in the currency exchange. You might notice that  stocks behave differently or in opposite direction . That might make reaching a decision a little bit harder. I might think like you which stock to choose, stock A or stock B ? Stock A might move in opposite direction as stock B . They both represent good and solid companies from financial view. So which option ? option one , option two ?There is a third and a middle option ! why not buy both . Doing that is what is called diversification . Your money wallet that represent both stocks are now called portfolio .

• What does portfolio mean ?
• “A grouping of financial assets such as stocks, bonds and cash equivalents, as well as their mutual, exchange-traded and closed-fund counterparts. Portfolios are held directly by investorsand/or managed by financial professionals. ” ( Investopedia )

Most investors want to maximize their return and thus making more money by eliminating risk as much as possible that  is the main concept of portfolio theory.  Today I saw a nice software that does a good job in portfolio management : Manage Invest .  The software belongs to an Australian company called MySF Pty Ltd . This application applies the concept of diversification because it lets you manage and track plenty of investments up to 1000 . It also includes TAX calculation based on many countries , and you can add your country if its not available.This TAX feature is valuable because it lets you know the effect of TAX rate on a particular investment , that will make your portfolio more efficient. The purpose of my article is to show you the concept of portfolio in brief by showing you a real tool (software). I will dig more in this topic in  future articles . Have fun

Tags: portfolio, stock market