The Crucial Importance Of A Diverse Investment Portfolio

The Crucial Importance Of A Diverse Investment Portfolio

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We’ve all heard the horror stories of Wall Street bankers going bankrupt after poor investments. For many, investing is simply a risk not worth taking. If you’re building a retirement fund, or saving for your children’s college fees, you might not want to take a chance. Of course, investment isn’t all about risky dals and bankrupt brokers! There are safe and secure ways to look after your money. It all starts with a balanced and diverse portfolio.

Diverse Investment Portfolio
Diverse Investment Portfolio

Essentially, that means spreading your investments in a variety of different industries. By doing this, you eliminate much of the risk from your personal finances. For example, let’s say you’ve got all your money in the tech industry. You’ve invested in Facebook, Twitter, and you’re primed to invest in Snapchat when the IPO hits the market this year. This industry is growing rapidly and your share price is soaring! Great news. But, what if tech bubble bursts? (As it is predicted to do shortly.) Your investments will quickly lose money and disappear.

If you’ve got your investments spread across other industries, you can take the hit of the tech bubble bursting. The fundamental idea is to avoid putting all your eggs in one basket. A balanced and diverse portfolio means putting eggs in various baskets for security. If one egg is destroyed, at least you’ve got lots more.

One of the easiest ways to do this is putting your money in a mutual fund. A mutual fund is overseen by a financial advisor. They’ll collect your money and mix it with money from a number of other investors, hence mutual. That gives them a big pot of money to play with. They’ll invest that money in a variety of different areas and you’ll benefit from the extra income. It’s safe and lucrative.

Investments
Investments

The other option is to take it upon yourself to manage your portfolio. You can choose the right group of stocks and shares to buy and give yourself a solid standing on the stock market. You can then strengthen this portfolio by investing in property. The housing market is an entirely different world from stocks. It is not controlled by the same forces or affected by the same issues. If the stock market takes a hit from currency fluctuations, the housing market will remain unaffected. Property is an excellent asset to have.

Of course, now and then, a major global disaster can impact your investments across the board. After the 9/11 attacks, almost every major market suffered a severe hit. In cases like these, you need a safety net. There’s one market that is oblivious to external factors: gold, silver, and precious metals. Getting your hands on gold bullions and American silver eagles will provide you with a recession-proof safety net.

Investing is only risky if you fail to protect your assets and investments. The core foundation of this technique is creating a balanced and diverse portfolio. Don’t risk your money. Spread your investments.