Getting started with investing can be intimidating. So many asset classes, so many options and so many consequences — talk about analysis paralysis!
The truth is, you don’t have to be an expert finance guru to see rewards from personal investing. In the end, it all boils down to your investment portfolio which you do have to know well.
This article will leave you with a clearer understanding of what an investment portfolio is and how to best put one together.
What exactly is an investment portfolio?
In personal finance terms, an investment portfolio is simply a collection of your financial investments like stocks, bonds and real estate.
Think of it as a menu of sorts. When you’re posed with the question of “What are you investing in?”, simply show them your portfolio, which will give a big picture idea of where your investment funds are going.
What goes into an investment portfolio?
What your investment portfolio consists of will depend on what assets you’re choosing to invest in. There are a ton of asset classes out there, but we’ll touch on the four main types of asset classes today: fixed income, equities, cash and cash equivalents, and others like tangible assets.
Read more: Investment Asset Classes Explained
Fixed income
What is it: Corporate bonds, retail bonds
Risk and returns: Low risk, low returns
Fixed income securities include a broad range of investments, most typically bonds (loans to government or large organisations). The common theme here is that returns are paid on a regular basis in the form of interest.
Investments under this category may hold low risk and less returns, but offer a steady source of income which you receive at regular intervals.
Equities
What is it: Stocks, equity funds, index funds
Risk and returns: High risk, high returns
Also known as stocks or shares, equities represent partial ownership in a company that you invest in. Since you’re investing in a company, your returns depend on how well the company is doing.
This is why equities are famously known to be the riskiest asset class due to its volatile nature. Likewise, it’s also the one which has historically produced the highest returns.
Cash and cash equivalents
What is it: Savings accounts, fixed deposits, treasury bills
Risk and returns: Low risk, low returns (more so than bonds)
The cash asset class is pretty straightforward. If you have funds in a savings account or tucked away in Fixed Deposit (FD) accounts, then this asset class is already part of your portfolio.
It also comprises cash equivalents like treasury bills, short-term bonds and commercial papers. While fixed income investments are focused on long-term growth, investments in cash and cash equivalents are usually pursued for their liquidity.
Tangible assets

What is it: Property, commodities like gold and fossil fuel
Risk and returns: Variable
A few examples of tangible assets include investments in property and commodities. Investing in property could mean anything from rental income, REITs or property appreciation, but it certainly doesn’t come easy given its high barrier to entry.
Commodities like gold and crude oil aren’t typically sought after by personal investors, but they may make up a small percentage of a larger portfolio as a tool for diversifying it.
Building the right portfolio for you
The different types of assets above make up your platter of potential ingredients. Now, how you choose to mix and match those ingredients could result in a deliciously rewarding plate.
Structuring your asset allocation will depend on a multitude of factors. As time passes and each asset class performs differently, the allocation might get skewed too. This is when you come back in to rebalance your portfolio.
Things to consider when allocating your assets
- Your investment end goals
- Your initial capital available
- Your level of risk tolerance
- Your investment horizon
What are your investment end goals?
A 21-year-old student and a 45-year-old family breadwinner will have vastly different investment portfolios. Start with the end in mind, and be realistic with what you’re aiming to achieve!
A portfolio that’s focused on capital appreciation for example, would prioritise long-term growth — we’re talking upwards of ten years. The lion’s share of such a portfolio would consist of mostly stocks.
Older investors with less capacity for risk on the other hand, might be more concerned with capital preservation. Unlike younger investors with few liabilities, older people’s portfolios would consist of safer assets like certain bonds and money market instruments.
How much money can you afford to invest?
You’ve probably heard this before: never invest money you can’t afford to lose. It’s a simple but important rule.
Before you dive in, make sure your emergency fund is well-stocked and you’ve paid off your high-interest debts.
How much risk are you willing to take?
Most investment portfolios are categorised by risk, which is the main determining factor for what assets actually go into the portfolio.
Your risk tolerance can be broadly categorised into
- Aggressive
- Moderately aggressive
- Moderate
- Moderately conservative
- Conservative
An aggressive portfolio means you’re willing to put your funds on the line for the possibility of greater gains (keyword: possibility).
On the other end of the spectrum, a conservative portfolio prioritises avoiding loss. This means you don’t mind your portfolio realising smaller gains as long as some steady returns are guaranteed.
How long are you in it for?
How long do you plan to keep your funds in the market before you need them? Typically, a horizon of ten years and above is considered long-term, while three years and below is considered short-term.
Naturally, a longer time horizon is associated with lower volatility and gives time for your investments to grow, making it suitable for a more aggressive portfolio. If you’re investing for a long-term goal such as retirement, you can afford to make riskier decisions (within reason of course!).
Why it matters to diversify your investment portfolio
Diversification means spreading up your investment into various asset classes to limit exposure to a single type.
Diversifying is the golden rule to cutting down on your portfolio’s risk. With a well-diversified portfolio, each of your investments operate in different environments and are inherently different from each other. Losses in one area will then be offset by gains in another.
For young enthusiastic investors with ample funds, you might be tempted to opt for stocks entirely. After all, high risk high reward, right? Putting all your eggs into one basket however, only means that you stand to lose everything.
Below is a general example of a well-diversified investment portfolio for high-risk investors:

*This sample is for educational purposes only and is not meant to be used as a direct reference.
Protip: Did you know you can use the Planner Bee app to view your own investment portfolio? Discover how you can automatically link and manually input your investments, or find out more about Planner Bee here.