Portfolio Management

Portfolio management is how you set yourself up for long-term financial success and stability. Learn how to square your own investments with your time horizon and risk tolerance.

Frequently Asked Questions
  • How many stocks should I own?

    There’s no one-size-fits-all number of stocks you should own, but you should diversify your portfolio to include stocks from a range of sectors to reduce risk. ETFs and mutual funds that track broad-based indexes like the S&P 500 or Russell 3000 are an excellent way to diversify your stock portfolio.

  • Do I have to pay taxes if I rebalance my 401(k)?

    No, you won’t have to pay taxes on the sale of any appreciated assets within your 401(k) during rebalancing. Your capital gains in a 401(k) aren’t taxed until the money is withdrawn from the account. Selling assets to rebalance a regular brokerage account, however, will incur taxes.

  • What is the most volatile sector?

    Historically, the energy sector has been very volatile compared to the broader market. S&P Global research found that over the course of the 2010s, the energy sector had a standard deviation of 20.3%, nearly double that of the least volatile sector, consumer staples (10.7%). The energy sector is susceptible to unpredictable and dramatic swings in the price of oil.

  • What industries outperform during recessions?

    Some bright lights for investors during recessions can include consumer staples, groceries, alcoholic beverages, cosmetics, and discount retailers. Companies in these spaces either offer consumers essential items, non-essential goods at the best price, or small luxuries and comforts that people can and want to make room for in tighter budgets.

Key Terms

Close-up of woman trading stock online on mobile phone
How to Buy Fractional Shares on Fidelity Investments
Business man trader investor analyst using mobile phone app and laptop
How to Invest in Commodities
Woman using smartphone to trade fractional shares at a coffee shop
How to Buy Fractional Shares
A young woman reviews her portfolio on a tablet
Portfolio Management Tips for Young Investors
Portrait of Warren Buffett
Is Warren Buffett’s 90/10 Asset Allocation Sound?
Are target date funds a good fit for millennial investors?
Investing in Target Date Funds: A Guide for Millennials
Asset Management
What Is Asset Management, and What Do Asset Managers Do?
Diversification: Owning a wide variety of investments with different characteristics to reduce volatility.
What Is Diversification? Definition as Investing Strategy
Efficient Frontier: What It Is and How Investors Use It
Long-Term Investments: An account on the asset side of a company's balance sheet that represents the company's investments, including stocks, bonds, real estate, and cash.
Long-Term Investments on a Company's Balance Sheet
Time-Weighted Rate of Return
How to Use the Time-Weighted Rate of Return (TWR) Formula
Warren buffet look
Warren Buffett Portfolio: 6 of His Best Long-Term Picks
Build a Dividend Portfolio That Grows With You
Assets Under Management
Assets Under Management (AUM): Definition, Calculation, and Example
Peter Lynch
Pick Stocks Like Peter Lynch
Business People Working at Office
What Is a "Nonlinear" Exposure in Value at Risk (VaR)?
Types of Rebalancing Strategies
Padlock on Hundred Dollar Bill
Protecting Portfolios Using Correlation Diversification
Businessman Working Analysis Business Information
Use Dollar-Cost Averaging to Build Wealth Over Time
Top 4 Strategies for Managing a Bond Portfolio
A money bag with the word Investments and dollars on a scale.
How to Calculate Expected Portfolio Return
Investment analysis
Investment Analysis: Definition, Types, and Importance
Liquidating: Definition and Process as Part of Bankruptcy
Cube wooden blocks with word TAX on a magnifying glass on US dollar banknotes on a wood table.
How to Use Tax Lots to Pay Less Tax
man looking at computer screens with line graphs
9 Asset Classes for Protection Against Inflation
6 Asset Allocation Strategies That Work
Aggressive Investment Strategy: Definition, Benefits, and Risks
Bottom-Up Investing: Definition, Example, Vs. Top-Down
The Midsection of Businessman Using Mobile Phone on Table
Cumulative Return: Definition, Calculation, and Example
Businesswoman Analyzing Investment Charts With Laptop
Overweight (Investing): Definition, Recommendations, Pros & Cons
Real Rate of Return: Definition, How It's Used, and Example
Scenario Analysis: How It Works and Examples
Close-Up Of Text On Paper Currency
Determining Where to Set Your Stop-Loss
Calculate How Much Cost or Spending Have With Credit Cards
Variance vs. Covariance: What's the Difference?
A businessman trader got a new business idea while sitting at a desk full of computer monitors.
3 Terms Traders Must Know: Account Value, Cash Value, Purchasing Power
Constant Proportion Portfolio Insurance (CPPI): Definition, Uses
stock charts on a tablet
How To Save To Start An Investment Portfolio
Information Coefficient (IC): Definition, Example, and Formula
What Does Standard Deviation Measure In a Portfolio?
A display of US dollar banknotes.
Can I Make Money With a Couch-Potato Portfolio?
Hyperbolic Absolute Risk Aversion: What It Is, How It Works
A person works on a laptop and uses a calculator
Wrap Accounts: An Alternative to Broker's Commissions
Tactical Asset Allocation (TAA): Definition and Example Portfolio
Businesswoman Analyzing Investment Charts With Laptop
6 Ways to Boost Portfolio Returns
A double exposure with business charts, a stack of coins and a night city background.
Managing Currency Exposure in Your Portfolio
An asset statement showing diversification and pie chart with a pen.
Diversification: It's All About (Asset) Class
A person looks at their phone.
Going All-in: Investing vs. Gambling
A salesman hand using a stylus pen, pointing on a tablet screen.
Pooled Internal Rate of Return: Meaning, Formula, Limitations
Semivariance: Meaning, Formulas, and Calculations
Diversification
The Many Ways to Achieve Investment Portfolio Diversification
How To Adjust and Renew Your Portfolio
How Is Margin Interest Calculated?
A man types numbers into a calculator while looking over documents at a kitchen table
How Tax-Loss Harvesting Works for Average Investors
A businessman walking upstairs.
4 Steps to Building a Profitable Portfolio
An investor looks over his portfolio.
Roll's Critique: What it Means, How it Works
Mid-Cap: Definition, Other Sizes, Valuation Limits, and Example
Vice President receives report
Passive vs. Active Portfolio Management: What's the Difference?
Investor Checking Performance of Financial Portfolio Online Whilst Reviewing Investment Statement
What Is the Ideal Number of Stocks to Have in a Portfolio?
Equity Risk Premium: An excess return that investing in the stock market provides over a risk-free rate.
What Is Equity Risk Premium, and How Do You Calculate It?
Businessman looking at newspaper excitedly.
Can Regular Investors Beat The Market?