If we could see into the future, there would be no need to diversify our investments.
We could merely choose a date when we needed our money back, then select the investment that would provide the highest return to that date. It might be a company share, or a bond, or gold, or any other kind of asset. The problem is that we do not have the gift of foresight.
Holding a balanced, diversified portfolio with a mix of investments can help protect it from the ups and downs of the market. In practical terms, diversification is holding investments which will react differently to the same market or economic event By diversifying your portfolio, you can aim to make these differences in performance work for you.
You can diversify your portfolio in a few different ways through funds that invest across:
Different types of investments
Different countries and markets
Different types of industries and companies
Generally speaking, there are four broad asset classes:
fixed interest (bonds)
Since performance in any one asset class can be unpredictable depending on shifts in the market, investing across several asset classes can provide greater diversification potential. Therefore, if one asset class performs favourably, it can potentially offset another that is performing less favourably, providing more balance to your portfolio when market shifts occur.
Will your current plans gt you to where you want to be financially? Whatever wealth means to you – now and in the future – we can help you achieve your goals for it in every area and stage of your life. For more information, or to discuss how we can help you to achieve your goals and take Financial control, please contact us.