What is the primary goal of an investment portfolio?

What is the primary goal of an investment portfolio?

• A. To avoid losses completely
• B. To include various investment types
• C. To exclusively invest in real estate
• D. To grow wealth through a single investment

Answer: (B)

The primary goal of an investment portfolio is to include various investment types. This diversification is essential as it helps to spread risk across different asset classes, such as stocks, bonds, real estate, and cash equivalents. By combining various investments, an investor can enhance potential returns while mitigating the impact of any single asset's poor performance. A diversified portfolio aims to balance risk and reward, which is a fundamental principle in investing. This strategy helps investors achieve their long-term financial goals and withstand market volatility more effectively.

The primary goal of an investment portfolio is to include various investment types. This diversification is essential as it helps to spread risk across different asset classes, such as stocks, bonds, real estate, and cash equivalents. By combining various investments, an investor can enhance potential returns while mitigating the impact of any single asset's poor performance. A diversified portfolio aims to balance risk and reward, which is a fundamental principle in investing. This strategy helps investors achieve their long-term financial goals and withstand market volatility more effectively.