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.