how you choose to do it is up to you your goals for the future your appetite for risk and your personality are all factors in deciding how to build your portfolio 
regardless of your portfolio s asset mix all portfolios should contain some degree of diversification and reflect the investor s tolerance for risk return objectives time horizon and other pertinent constraints including tax position liquidity needs legal situations and unique circumstances the word portfolio comes from the latin folium meaning to carry leaves as in papers stock and bond certificates were once only issued in paper form from which this terminology was adopted portfolio is also used to describe an artist s collection of works for similar reasons 2managing a portfolioyou can think of an investment portfolio as a pie that has been divided into pieces of varying wedge shaped sizes each piece representing a different asset class and type of investment investors aim to construct a well diversified portfolio to achieve a risk return portfolio allocation that is appropriate for their level of risk tolerance 1 although stocks bonds and cash are generally viewed as a portfolio s core building blocks you may grow a portfolio with many different types of assets including real estate gold stocks various types of bonds paintings and other art collectibles carla tardi investopediathe sample portfolio allocation pictured above is for an investor with a low tolerance for risk in general a conservative strategy tries to protect a portfolio s value by investing in lower risk securities in the example you ll see that a full 50 is allocated to bonds which might contain high grade corporates and government bonds including municipals munis the 20 stock allocation could comprise blue chip or large cap equities and 30 of short term investments might include cash certificates of deposit cds and high yield savings accounts most investment professionals agree that though it does not guarantee against loss diversification is a key component for reaching long range financial goals while minimizing risk types of portfoliosthere can be as many different types of portfolios and portfolio strategies as there are investors and money managers you also may choose to have multiple portfolios whose contents could reflect a different strategy or investment scenario structured for a different need hybrid portfoliothe hybrid portfolio approach diversifies across asset classes building a hybrid portfolio requires taking positions in stocks as well as bonds commodities real estate and even art generally a hybrid portfolio entails relatively fixed proportions of stocks bonds and alternative investments this is beneficial because historically stocks bonds and alternatives have exhibited less than perfect correlations with one another portfolio investment