Diversification reduces Investment Risk
Investing without diversification is exposing yourself to unnecessary risk. Avoidable risks are holding too few securities, speculating on specific industry sectors or countries and following the predictions of others. These are risks that don’t provide a reliable reward.
By spreading your investments across different types of asset classes you can build a portfolio for all conditions. This is because while one asset class is performing poorly, another may be doing well. This is not to say diversification is complete protection, but it is insulation to reduce the volatility in your portfolio.
Investing without diversification is exposing yourself to unnecessary risk.
Here are some avoidable risks:
- Holding too few securities
- Speculating on specific industry sectors or countries
- Following the predictions of others
These are some of the risks that don’t provide a reliable reward.
Your fortunes are never riding on the performance of one company, one country, a single sector or one asset class.
At Milestone Financial Planners, we build diversified portfolios that are structured to capture returns and minimise risk.