There was an interesting conversation on investments that I had with a friend of mine. He has a simple equity-bond portfolio and the weightage is 60-40 respectively. As we chatted on we started to go into the nitty gritty of his portfolio, and what he revealed next came as a surprise to me.
His portfolio is consisted of only two individual companies at the equity portion, and a corporate bond making up the entirety of his bond part.
When I asked him further on the choice of his components, he said he was familiar with them and deemed them as safe investments.
Risks
Using my friend's portfolio as an example, let us assume his two company equities are Company A and Company B, and the corporate bond is called Bond Z. The ratio of holdings between Company A, Company B and Bond Z is 30 : 30 : 40 ......