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Why Should I Diversify My Portfolio?

We’ve all heard the phrase, “don’t put all your eggs in one basket.” Though it’s become fairly cliche, the truth of it remains important, especially when it comes to your finances.

Diversifying your portfolio can significantly help you to maximize returns and avoid financial losses (Investopedia).  Though investment portfolio management can be confusing on your own, our team is here to help you navigate the world of diversification.

What Does Diversification Mean For Investors?

As an investor, you likely understand that there is a fair amount of risk involved with investing your money. Despite these risks, many people decide to build an investment portfolio anyway. When you diversify your portfolio, you make sure that you have stable investments if one industry should fail.

For example, if you put all of your money in the stock market and it crashes, you lose all your money. However, if you put some of your money in the stock market, some in bonds, some in real estate, and keep some in cash, a smaller percentage of your money is lost if the stock market crashes. Think of it as putting your eggs in separate baskets so that when you drop a basket, you still have eggs left intact.

Downsides Of Diversifying Your Portfolio

Though the process is ultimately worth it, there are downsides to diversification as well.

Primarily, it takes more time and effort to manage a diverse portfolio. With your money tied up in many different areas, keeping track of your money and responsibilities can be a bit more involved.

Secondly, it can be expensive. There are often fees involved with various investments. If you split up your investments, it only stands to reason that you will have more fees to pay.

Thirdly, the process of diversification can be complicated. For some investments, it is important to know details about risk tolerance levels and other lesser-understood concepts. For many people, this complication causes frustration and confusion, making the process stressful as well as difficult.

Turn To An Investment Advisor

The solution for many people is working with an investment advisor to diversify their portfolio. An investment advisor can help you to decide which systems are best for your money, and how to manage your money in a way that works for you. Hiring an investment advisor can help you to stabilize your investments, mitigate risk, and make sure that your investments are protected. When it comes to investment portfolio management at Trajan Wealth, we believe in tactical investing, specifically cultivated to deliver stable results that grow over time.

Trajan Wealth: Your Investment Advisor If you want to diversify your assets but don’t know where to begin, our team at Trajan Wealth can help. With our custom portfolio design, your investments are in safe, trustworthy hands. Learn what makes us different, and then schedule a virtual or in-person consultation. We can’t wait to discover what we can do for you and your investments.

© 2024 Trajan® Wealth LLC. Nothing in this blog is intended as investment advice, nor is it an offer to buy or sell any security. Please consult your financial advisor for questions about your personal financial situation. All investments involve risk, including the potential for loss. Trajan Wealth clients and employees may have a position in any of the securities mentioned. Portfolio holdings and other data are subject to change at any time and without notice. Additionally, the above links provided as a convenience and for informational purposes only; they do not constitute an endorsement or an approval by Trajan Wealth, L.L.C., of any of the products, services or opinions of the corporation or organization or individual. Trajan Wealth, L.L.C., bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. These materials are for informational and educational purposes and are not designed, nor intended, to apply to any person’s individual circumstances. It does not take into account the specific investment objectives, tax and financial condition, or particular needs of any specific person. Please consult with your legal and/or tax advisor before making any tax-related decisions.