1: portfolio definition
2: how portfolio works
3: portfolio vs Demat account
4: example of portfolio
Quick pick
A place that holds and tracks all the investment positions inside one investing account is what is known as a portfolio.
Opening information:
Portfolio breaks into the two words port and folio. port means the harbor in which all the categories of something particular item navigate through a certain route harbor.
Folio means paper with printed materials that record and track the activities in words numbers or anything.
A portfolio means some category of things are navigated through something to track and record, then hold certain activities.
Let’s take ship port, the port is a harbor that receives all the necessary licensed boats and allows the boats to stay and go out of port.
If this each moved activity isn’t tracked with a number anyway. Then this port didn’t have any folio or if it tracked with any category or numbers then it is called a portfolio.
this article contains information about what a is portfolio in the stock market, how portfolios are formed, and what the is distinction between a portfolio and vs Demat account. Finally about the example of portfolio.
1: portfolio definition
Without the portfolio, if anyone bought the shares of stock they couldn’t hold it. Before the technology, the person who bought the stock would have a certificate of proof.
The proof shows how much the certain person bought the stocks. If the same person bought five industry stocks he might have 5 different certificates of stock.
He would have the certificate anyway, but he didn’t have the place to secure and hold the certificate in any place.
Anyone who bought the 5 stock certificate couldn’t simply keep the certificate at any place Such as home, workplace, or whatever it might be.
By keeping the certificate in any place might increase the chance that certain stockholders’ proof might be gone.
On the other hand, people enter the technology world and buy certain stocks simply through the Demat account and sell them when they want.
But this made the people very difficult to check and manage, then hard to see the worth of the current
holding stocks.
Selling stock without knowing the current worth of stocks that the stocks bought a long day ago doesn’t make the stockholders profitable.
So Investor have problems knowing the current stock worth for all bought stocks and problems tracking the price of stock at each minute
That’s where the portfolio needs come to each investor. So now let’s have a look at how portfolios work.
2: how portfolio works
A portfolio holds all the stocks and bonds and all debt instruments inside them.
The portfolio helps track and record the transactions inside the investment trading account.
Once the investor buys any stock or bonds through the trading account, the portfolio holds certain stocks inside the account.
Which tracks them and shows the worth of stocks what if you sell the particular stocks or bonds at the current time?
And also which so how much is the growth and loss in the total investment, then how much cash is remaining in your account?
Here most people confuse the portfolio and Demat account so let’s have a look at what it is.
3: portfolio vs Demat account
Demat accounts are dematerialized accounts. This means without any physical or tangible assets it helps to access electronically to any stock account.
The portfolio is the inside of the Demat account. Which portfolio helps to hold and manage the stock and bonds you purchased?
So Demat accounts are not the opposite of portfolio accounts, the portfolio is inside every Demat account.
To make you more clear about the particular portfolio let’s have a look at one example.
4: example of portfolio
Let’s say Mr. John had opened the Demat account for investing in stocks and bonds.
Now John had deposited 100,000 dollars to his investment Demat account.
He used the first 25k dollars to invest in Coca-Cola stock and the other 25k dollars in Apple stocks.
John purchased the stock of Coca-Cola at $100 and Apple at $170. They own 250 Coca-Cola shares and 147 shares at Apple.
These Coca-Cola and Apple shares are held inside the portfolio of John Demat’s account.
Now you look at John’s portfolio inside his Demat account. The portfolio shows the transaction types and history.
then if the stocks move more or less than what he purchased, it shows what’s the current worth of the stock.
Let’s say if the apple stock John purchased at 170 dollars moved low to 160 dollars, then his portfolio shows his 25,000-dollar Investment is worth $23,529 now.
On the other hand, it also shows how much the remaining in the account balance which is $50,000 more to invest in stocks and bonds.