Portfolio

A portfolio is the make-up of everything you own — how much in stocks, how much in bonds, how much in cash. It is the mix, not the individual picks, and that mix drives the outcome more than most people expect.

Several studies have found that most of long-run return comes from asset allocation rather than security selection. The split between stocks and bonds matters more than which particular stocks you bought.

The right mix depends on age and purpose. Thirty years from retirement you can carry more equity and tolerate the swings; money you need in three years belongs in cash and deposits. The same person can hold different portfolios for different goals.

Setting it once is not enough. When stocks run, their share of the portfolio grows on its own and quietly makes it riskier than planned. Rebalancing back to target roughly once a year keeps the plan intact. If you are starting out, two or three broad blocks — an equity ETF and cash, say — are enough. A mix you can actually stick to beats a clever one you abandon.