Buying an asset and holding it for the long term in anticipation of an eventual return is a portfolio investment. An investor’s portfolio might include any combination of stocks, bonds, commodities, real estate, or other assets. The portfolio’s composition would depend on the investor’s risk tolerance, the amount of money he or she wanted to invest and the time horizon in which they are striving to achieve various goals.

Many investors generally strive for balanced portfolios that aren’t too weighted in any one type of asset. The aim is to reduce volatility and to achieve diversification that may help manage the potential fallout from a downturn in market values.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.