Diversify Your Investment Portfolio

500 views

Published on

http://www.profitableinvestingtips.com/stock-investing/diversify-your-investment-portfolio

Diversify Your Investment Portfolio

Diversification is a means of reducing risk and increasing opportunity in investing. The chances of having a stock in your portfolio rise significantly in price goes up when you have five well-chosen stocks instead of one. The chances of losing all of your investment capital also go down when you diversify your investment portfolio among several stocks in several market sectors. Likewise, if a part of your investments is in property, a part is in stocks, a part is in bonds, and a part is in offshore investments you can reduce risk and increase the opportunity for profits. When suggesting offshore investment opportunities we wrote about Three Good Offshore Investment Ideas, for example.

Diversify Your Investment Portfolio to Gain Variety and Opportunity

When you diversify your investment portfolio you invest in a variety of assets. Because the value of each investment does not go up or down in perfect harmony, diversification averages out risk, as well as gain. To the extent that one is looking to a big gainer, having more stocks, real estate, or other assets may serve to increase the odds of success. In their book A Random Walk Down Wall Street the authors note that the best return in stocks is often a basket of about forty small cap stocks. These stocks are priced low because of the risk inherent in small companies. However, if you diversify your investment portfolio with a large number of these stocks, you increase the chances of finding a huge winner which will negate the effects on the portfolio of a handful of losers.

Published in: News & Politics
0 Comments
3 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
500
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
29
Comments
0
Likes
3
Embeds 0
No embeds

No notes for slide

Diversify Your Investment Portfolio

  1. 1. Diversify Your Investment PortfolioBy www.profitableinvestingtips.com
  2. 2. Diversification is a means ofreducing risk and increasing opportunity in investing. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  3. 3. The chances of having a stock in your portfolio rise significantly in price goes up when you have five well-chosen stocks instead of one. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  4. 4. The chances of losing all ofyour investment capital alsogo down when you diversify your investment portfolio among several stocks in several market sectors. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  5. 5. Likewise, if a part of yourinvestments is in property, a part is in stocks, a part is in bonds, and a part is in http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  6. 6. offshore investments you canreduce risk and increase the opportunity for profits. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  7. 7. When suggesting offshoreinvestment opportunities we wrote about Three GoodOffshore Investment Ideas, for example. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  8. 8. Diversify Your InvestmentPortfolio to Gain Variety and Opportunity http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  9. 9. When you diversify your investment portfolio youinvest in a variety of assets. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  10. 10. Because the value of eachinvestment does not go up or down in perfect harmony, diversification averages out risk, as well as gain. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  11. 11. To the extent that one islooking to a big gainer, having more stocks, real estate, or other assets may serve to increase the odds of success. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  12. 12. In their book A Random WalkDown Wall Street the authors note that the best return in stocks is often a basket of about forty small cap stocks. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  13. 13. These stocks are priced lowbecause of the risk inherent in small companies. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  14. 14. However, if you diversify your investment portfolio with alarge number of these stocks, you http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  15. 15. increase the chances offinding a huge winner whichwill negate the effects on the portfolio of a handful of losers. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  16. 16. There Is Always a Bull Market Somewhere http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  17. 17. Not all investment vehicles goup and once or down at once. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  18. 18. As an example, when the price of oil goes up, the price of oil company stocks generally rises. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  19. 19. At the same time the prices of industrial stocks, hit by the higher price of energy, typically go down. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  20. 20. By investing in stocks inseveral sectors you can oftenaverage out gains and losses. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  21. 21. The idea here is not to hedge risk only, however. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  22. 22. Each stock, each investment needs to be looked at with thorough fundamental analysis in order to pick investments with a http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  23. 23. high expected rate of return and a significant margin ofsafety against loss during bad times. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  24. 24. To the extent that economieslike those of the BRICS nations are rising faster than those of Europe http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  25. 25. or North America, it may be wise to diversify your investment portfolio withemerging markets in mind. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  26. 26. To the extent that there is atransparency problem when investing in China, Russia, India, http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  27. 27. Brazil, or South Africa, it is often wise to diversify your investment portfolio with an eye toward keeping part ofyour money in North America. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  28. 28. Choice of Investments whenYou Diversify Your Investment Portfolio http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  29. 29. Diversification is not asubstitute for simply picking good investments. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  30. 30. Investing in gold can be a good idea under the rightcircumstances as can investing in beer be a good idea. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  31. 31. Investing in oil, investing in China, and picking newwinners in high tech stocks can all be profitable undertakings. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  32. 32. However, a smart investor picks his stockswisely, routinely watches each investment in his portfolio, and buys and sells investments accordingly. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  33. 33. When you diversify yourinvestment portfolio you do not commit to a “buy and hold” strategy. http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  34. 34. Rather you chooseinvestments that fit a rationalapproach aimed at increasing http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio
  35. 35. opportunity while alsoreducing investment risk.http://www.profitableinvestingtips.com/stock-investing/diversify-your- investment-portfolio

×