Tip #9 - Diversification
Every week we post a tip that we hope will help you become a successful share market investor.
Tip #9 — Diversification
When it comes to investing, diversification is important for two reasons: it can potentially protect you against undue losses if investments in a particular company, sector or asset class fail, and it can actually improve the overall return of your portfolio. For these reasons it has been described as the only free lunch in investing but it is important not to go overboard. Diversification does not guarantee success and if it’s overdone it adds complexity and has the potential to dilute rather than improve returns.
This information is not a recommendation nor a statement of opinion. You should consult an independent financial adviser before making any decisions with respect to your shares in relation to the information that is presented in this article.
FURTHER READING
Active vs. passive investing
What are the differences between active and passive investing, and does one offer a higher guarantee of success than the other? Keep reading to learn more.
Why Sharesight is the best multi-asset portfolio tracker
We explore how Sharesight helps you stay on top of your portfolio, optimise your performance and set yourself up for a successful year of investing.
Why tax time is so painful for family offices — and what to do about it
We discuss five reasons tax time hits family offices harder than it should, and what better infrastructure looks like in each case.