Diversifying Your Investment Portfolio
Investing is a necessary step to growing your wealth. There are several strategies people may take, but certainly one of the most important is diversification. “Don’t put all your eggs in one basket” is a great way to describe diversification. Diversification means spreading the risk of your investments among many different securities, with the main goal of reducing risk and increasing your investment success.
The market can be volatile and unpredictable, so having your investments spread across many different risk levels, especially when the market is not doing well, will reduce your risk and be more efficient when investing, For example, if your portfolio is made up purely of stocks, then your entire portfolio will be subject to market related risk.
There are several ways in which to diversify your portfolio. This can all depend on how much risk you are willing and able to take on. If you are not sure where to start, speaking to a financial advisor is a great step to take to assess the amount of risk you are willing to take on, while having your money spread out over several types of investments and common asset classes such as mutual funds, single stocks, bonds, ETFs, index funds, and real estate.