Structuring a portfolio of assets depends on the objectives set up in the financial plan. Those stated goals are functions of the individual’s age, financial position, and anticipated future income. Translating financial objectives into a structured portfolio of stocks and bonds is by far the most important step toward achieving desired results.
In its simplest form, a portfolio consists mainly of three components: cash, income-yielding securities, and common stocks. The portion of each of these components in an investment portfolio will differ throughout the span of the business cycle in light of individual risk tolerance and specific financial objectives.
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