Portfolio (finance)

Imagine you have a box and you want to put a bunch of different toys in it. Your box represents your portfolio and each toy represents a different thing you have invested money in, like stocks or bonds.

Now, you wouldn't want all the toys in your box to be the exact same because that would be boring and not very helpful. Instead, you want to choose a variety of toys that will help you have fun and learn new things.

Similarly, when creating a portfolio, you want to choose a mix of investments that will help you reach your financial goals. Some investments may be more risky but have potential for higher returns, while others may be safer but with lower returns. By choosing a variety of investments, you can spread out your risk and potentially earn more money over time.

Just like you might switch up the toys in your box over time as you get new ones, you may also want to periodically adjust your portfolio to ensure it continues to align with your financial goals and risk tolerance. Overall, having a well-diversified portfolio is like having a box full of fun and educational toys that will help you learn, grow, and enjoy life.