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Začínáme s investováním

What Is a Portfolio — and What Does the Simplest One Look Like

5 min readCompound

Key takeaways

A portfolio is everything you invest in — stocks, ETFs, funds, cash, or even real estate.

Why build a portfolio at all?

If you put all your money into one stock and that company goes bankrupt, you lose everything. A portfolio protects you from that. When you spread money across multiple investments, the fall of one will not wipe you out. This is called diversification — the golden rule of every investor.

Good news: a single global ETF is itself an excellently diversified portfolio. It holds shares in thousands of companies around the world. You do not buy thousands of stocks manually — the fund handles diversification for you.

What does the simplest beginner portfolio look like?

One ETF tracking the entire world — for example a fund replicating the MSCI World or FTSE All-World index. Such an ETF holds shares from the US, Europe, Japan and other developed markets. For specific tips on building such a portfolio, see the article How to build your first portfolio.

Tip: Do not start with a complex portfolio of ten ETFs. Complexity does not bring better results — it only brings more stress and mistakes. One quality global ETF outperforms the vast majority of actively managed funds.

What is allocation?

Allocation describes how your money is divided between different types of investments. Example: 80% equity ETF, 20% bonds. The more stocks, the higher the potential return but also the larger the swings. The more bonds, the smoother the ride but the lower the return. As a beginner with a long horizon (10+ years) you can generally afford more stocks.

How do you track your portfolio?

Buying an ETF and forgetting is not enough. Check at least once a year whether your allocation still matches your plan. If stocks have grown a lot, their share may have increased — ideally you rebalance by making additional purchases. This process is called rebalancing. Otherwise you do not need to check your portfolio every day — that actually does more harm than good.

FAQ

How many ETFs do I need for a proper portfolio?

One global ETF (MSCI World or FTSE All-World) is enough. Adding a second and third ETF only makes sense if you specifically want to increase exposure to emerging markets or bonds. More funds do not automatically mean better results.

Should I share or make my portfolio public?

That is entirely up to you. Sharing a portfolio can be motivating, but remember: everyone has a different age, income, goals and risk tolerance. Never blindly copy someone else's portfolio — what works for them may not work for you.

What should I do when the market drops and my portfolio loses value?

The worst thing you can do is sell in a panic. Downturns are part of investing — historically markets have always recovered and surpassed previous highs. Continuing to invest regularly during a decline is actually advantageous because you are buying at lower prices.

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