Tanner’s Tips comprises of a father and daughter team, an unstoppable duo fighting apathy in the world of finance.
What on earth is diversification? This is a method of reducing risk in your investment portfolio. To put it simply, it means not having all your “eggs” in one basket.
By dividing your investments among different assets, you are reducing your overall risk. When you invest in a single asset class, for example equities, there is a potential for higher returns, but this is extremely risky. There is no guarantees with equities, and if the particular equities invested in suffer a loss, you also suffer that loss and could lose everything. On the other side of the coin, investing purely in deposits will give no significant return, but your capital is safe and secure. Diversification is attempting to get the best from both worlds.
Investment funds can be a great way of achieving diversification. It takes all the hard work out of diversifying your investment by doing it for you. Your investment is ‘pooled’ with other investors, this increases the overall investment amount, making it easier for the fund managers to diversify these funds across different assets. This style of investments allow investors to participate in equity returns, while minimizing the risk if these equities were to ‘go south’.
We would love to get feedback on these posts, and if there is anything in particular you would like to hear about, please let us know.
Disclaimer: All information provided on this site is provided for information purposes only and does not constitute a legal contract between this site and any person or entity unless otherwise specified. Information on this site is subject to change without prior notice. Although every reasonable effort is made to present current and accurate information, we make no guarantees of any kind.
This webite may contain information that is created and maintained by a variety of sources both internal and external. In no event shall this site be responsible or liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any such content, goods, or services available on or through the site.
Any links to external websites should not be construed as an endorsement of the content or views of the linked materials.