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diversification

The value of investments can fall as well as rise. You may get back less than you invested.

Just as a balanced diet is good for your health, holding a balanced and diversified investment portfolio can be good for your financial health. Diversifying your portfolio with a mixture of investments can help spread the risk and therefore, aims to reduce the impact that market volatility has on your investments.

There are many ways in which you can diversify your investment portfolio. A good start is to spread your investments into different geographical territories – perhaps some in the UK, some in Europe, then there’s the US and also Asia. Don’t forget to diversify by industry type too. Just imagine for example – you took the decision 2 or 3 years ago to only invest in oil companies… but you diversified by investing across the globe. It probably sounded like a great plan at the time – after all, the world is not going to stop needing oil is it? Yet here we are today with oil prices at record lows, hundreds of thousands of jobs on the line and the industry on its knees. The same happened to the banking sector back in 2008 and the technology sector at the beginning of the millennium.

The point is, you never know what’s around the corner. Something that seems like the hottest investment ticket in town today, could be worth nothing more than an old cinema ticket by tomorrow, so the more you can diversify your portfolio – the more you minimise the risk of your overall investment pot going down in value. Of course, even well-diversified portfolios are at risk from market movements. All investments can fall as well as rise. But a portfolio that’s diversified will generally move less overall and produce more balanced returns.

Getting back to how to diversify your portfolio – investing in a blend of stocks, corporate and government bonds and investment funds is a wise idea. You could also invest in a mixture of company sizes. There are some markets where “small”, agile businesses flourish, particularly when new innovations come to market… and then there’s times when the safety of a corporate goliath offers unbeatable protection and stability.

Whether you’re just starting out on the investment super highway or you already have an established investment portfolio in place – a meeting with a Financial Adviser could make all the difference to your financial future. Here at Credius we’ve got the experience and professionalism to help you make the most suitable investment choices so why not call us today on 020 7562 5858 or email us at info@credius.com. We’d love to hear from you.