You might be wondering why the image for this blog post is a delicious pizza pie – well brace yourself as I discuss how investments and pizza are related!
What is a portfolio?
A portfolio consists of a variety of investments in different asset classes. Stocks, bonds, and commodities are different slices that compose a portfolio. Each asset class plays a critical role in helping us build wealth, but more importantly help us prevent against losses and reduce our exposure to risk.
It’s important to address a critical component of a portfolio – diversification.
If you’re like me and can be indecisive on pizza toppings, you might select different toppings on half the pizza to make sure your pizza is complete. Similar to toppings, asset classes provide diversification. Owning different slices or assets allows you to gain exposure to returns of other assets.
Stay tuned as we continue to expand our investment management knowledge.