Share portfolio: What is it? 

Share portfolio: What is it?

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Investors can find this in their own area in the trading software of their preferred broker. If you trade shares, you have several options for strategically building up your own securities account. A share is not a share. They differ from each other in many ways. You can buy shares from different sectors and of different types. However, it is much more interesting in which asset class you acquire shares. Depending on the broker, the available asset classes differ. Among other things, you can hold shares as individual shares, ETFs, funds or CFDs. 

In the case of an individual share, we are talking about a normal share that you hold as a company share in your securities account. ETFs, short for Exchange Traded Funds, on the other hand, are several shares in which you invest simultaneously. In this case, you invest in several companies from one industry or even different industries. For example, if you invest in the MSCI World, you hold shares in the largest companies in the world. An alternative to ETFs are funds. These are actively managed, which is why they often have additional fees, but they pursue the same goal: here, too, shares from different companies are bundled together and purchased as a package. Both ETFs and funds help to diversify one's own risk and portfolio. 

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CFD traders

Finally, there are CFDs. Whoever buys shares CFDs trades with contracts for difference. These are designed for active, fast trading, where you bet on the rise or fall of prices. CFDs are the best way to take full advantage of market fluctuations, but they also carry a high risk of loss. 

Share trading is correspondingly diverse and this also applies to one's own portfolio. A share portfolio can thus be a colourful mix of shares from different asset classes. Equally, however, you can also decide on one of the asset classes and only receive this. Your own experience will quickly show which investment style suits you best. 

What belongs in a share deposit account?

A share portfolio is initially only characterised by the fact that shares are included in the portfolio. Which stocks are included is up to the individual trader in Exness. For beginners, I recommend a mix of individual shares and ETFs. This way you can diversify the risk, but at the same time also generate returns through the individual stocks. For beginners it is especially important to understand that there are distributing as well as accumulating investments in the share portfolio. What does this mean? For distributing investments in shares, you receive a dividend. You receive this with certain ETFs as well as individual shares - but not with all of them! These generate a cash flow, which can be particularly helpful in a buy-and-hold approach, in order to be able to draw directly from the share trade. 

On the other hand, there are accumulating equity instruments. With these, existing profits are retained. You therefore do not receive a dividend. Which is better? This question cannot be answered. Both forms have their appeal. It is therefore advisable to invest in both distributing and accumulating shares. 

What ultimately belongs in a share portfolio is very subjective. However, I have one last tip for diversifying your own portfolio: Invest in at least three, better five, different instruments. This way, losses of high-yield investments can be compensated.