5 Popular Portfolio Types 5.00 / 5 (100.00%) 1 vote

When it comes to investing and trading it is important to have a diverse background. That is why investors choose to have multiple portfolios as they are encouraged not to put all of their stock, figuratively in one plan. By understanding the 5 popular portfolio types you can have a better understanding of investing. It is important to note that there is a lot of research that will go into building each portfolio up. The portfolios are as follows; income, speculative, hybrid, defensive, and aggressive. By understanding how they work you will have a better concept of how to start building them up.

Income Portfolio

This portfolios main focus in making money through types of distributions to stakeholders or dividends. This type of portfolio usually generates a positive flow of cash. These tend to include master limited partnerships as well as real estate investment trusts as they are fantastic sources for investments that are income producing.

Speculative Portfolio

This type of portfolio is referred to as the pure gamble. This means that is offers more risk than any other portfolio. For this type it is suggested to only use a maximum of 10% of your investible assets. These could be initial public offerings or stocks that are rumored to be targets for takeover. This type of portfolio also refers to those investments that are bused on a decision regarding a rumor that a company is going to be taken over. This type of portfolio often requires the most research in order to be done correctly and successfully.

Hybrid Portfolio

This portfolio includes investments such as commodities, real estate, bonds, and art. This is the most flexible of the portfolios. These tend to include a variety of stocks along with bonds that offer fixed allocation proportions. This portfolio truly shows diversification in investments.

Defensive Portfolio

This type usually does not carry a high beta and tends to be isolated from broader market moves. Cyclical stocks are usually found in defensive portfolios are those stocks that basically are the basics. They tend to do better than those that are considered luxury or a fad. This type of portfolio is a good idea for most investors who are cautious as a lot of companies also offer a dividend which helps minimize any downside capital losses.

Aggressive Portfolio

This type of portfolio tends to include those stocks that have a high risk and high reward proposition. This means they tend to have a high beta within the overall market. These types of stocks experience large fluctuations especially when compared to the overall market. This type of portfolio requires an investor to seek out companies with earning growth and rapidly accelerating potential. Keeping losses to a minimum is the key to having a successful aggressive portfolio.

There are many types of portfolios available; some require more research and homework than others. However, by understanding the 5 popular portfolio types and the stock market and investing trends you can ensure a successful portfolio.