Portfolio Diversification – Why all the fuss?

31 Oct 2019

You keep hearing about diversification, but what does it actually mean for your investments. The whole point of diversification is to spread your investment risk, so if one market performs poorly, then the other markets you are invested in don’t get affected. 

“Most investment professionals agree that, although it does not guarantee against loss, diversification is the most important component of reaching long-range financial goals while minimising risk”. – Investopedia

In the past, many investment portfolios were only invested in certain markets or asset classes. While their performance might have been very profitable, if something caused them to underperform, then the investment portfolio would take a huge loss. 

Your deVere Acuma adviser can advise you on the best diversification of your portfolio according to your individual financial needs.

Possible ways you could diversify your portfolio

  • Spread your investments over different geographical regions or markets eg. Asia, USA, UK, Europe, China, Middle East etc.
  • Spread your risk over different asset classes eg. equities, cash, bonds etc.
  • Spread your risk over different industries eg. Financials, Infrastructure, Technology, Property etc.
  • You could include crypto currency into your investment portfolio
  • You could include property into your investement portfolio
  • Look for funds that are already diversified into different geographical regions or asset classes

“Don’t carry all your eggs in one basket”

Speak to your deVere Acuma adviser about diversifying your investment portfolio to suit your individual financial needs. [email protected]

https://www.investopedia.com/investing/importance-diversification/

Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere Acuma adviser for a personal consultation.

* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.