DIVERSIFYING YOUR PORTFOLIO.
Diversification is a vital tool for investors, fund managers & financial planners. When the market is doing relatively well, as it is doing presently, investors are unwilling to sell a stock for less than what they paid for it. By the time an average investor “reacts” to the market, 80% of the damage is done.
When the major indexes are climbing up, it’s very tempting to invest in anything but
equities. But we can never be sure what the market will do next. Hence the importance of a well diversified portfolio. A well diversified portfolio with an investment horizon of three to five years can weather most storms.
Here are some diversification ideas:
- Create your own virtual mutual fund by investing in a handful of companies you know & trust. Conviction runs high when you know where & why you have invested your money.
- Consider debt funds & fixed income plans. By adding some of these you can hedge your portfolio against market volatility & uncertainties.
- Invest regularly. This will smooth out the peaks and valleys created by market volatility: you invest money on a regular basis into a specified portfolio of stocks or funds.
- Keep track of your investments. Just because you have your investments in a diversified portfolio does not mean you should ignore the market forces at work. Stay current with your investment and remain in tune with overall market conditions. Know what is happening to the companies you invest in.
Investing can and should be fun. It can indeed be educative, informative & rewarding. Disciplined approach rewards investors – even in the worst of times.