Function

• A financial portfolio allows an investor to organize and manage his assets. It allows a person to understand what is losing and earning him money over a period of time, which can allow the person to use the past and present performance of his assets as an indicator of future performance. It can also identify problem areas and investments, such as debt, steep declines in profits or risky, unstable or unpredictable investments.
  
  

Benefits

• Organization is the key to good financing, and investments are no exception. A financial portfolio helps a person to keep track of exactly what he's worth (in terms of investments and debt), his net worth and how current and past performance trends, combined with any market or economic activities, may affect his assets. Financial portfolios are also comprised in such a way that you can clearly see where one investment is in relation to another. This is usually illustrated by bar graphs or pie charts.
  
  

Time Frame

• Financial portfolios are typically comprised and examined either yearly, quarterly or monthly. Those with less financial activity and/or more stable, long-term assets tend to view their portfolios less often. Those with multiple investments, frequent account activity, investments in more risky ventures and those whose investments may be affected by any sudden market or economic activity tend to view and analyze their portfolios more often.
  
  

Features

• Many average individuals maintain financial portfolios--even if their investments are limited. Many of these individuals do, however, tend to utilize their financial portfolios to establish and then work to achieve some financial goals. These goals typically consist of building good credit, eliminating debt and creating a budget. With these kinds of goals in mind, the average individual will then work toward obtaining investment goals, such as buying a home, investing in the stock market and opening a money market or certificate of deposit account with a high APY (annual percentage yield).
  
  

Warning

• Investments, by their very nature, are risky. Even the most stable-seeming investment can lose value due to both judgment calls and unforeseen activity. Financial portfolios cannot stave off any losses incurred from individual investments but can allow the investor and his financial planner to review all the available information in order to make an informed decision on if he should commence an investment, leave an investment as it is or cash out an investment. Remember, also, that many investments are locked in for specific periods of time, and if cash is removed from them early it can result in penalties that are much steeper than many potential losses down the road may be.