Wise investing essentially means being covered in case one revenue stream falters. If you spread your portfolio among several opportunities, you will be better able to achieve your money management goals. Sound financial services will help you do just that.
What Factors Influence Investment Decisions?
There are a number of things to consider when deciding on your portfolio diversification. Your strategy for growth plays a part. Do you want to allocate a portion to high risk, high yield investments? If so, a proportionate amount should be invested in more secure, slower growth options as a safeguard. Risk and reward do go hand-in-hand, but diversification means having some balance. How you diversify also depends on how much money you have to invest, and how much you can put into your portfolio each month. Cash fluidity is also a factor. You need to have financial flexibility, with enough cash and liquid investments to handle emergencies and short-term obligations and goals.
No Strategy Has a Guarantee
You need to recognize that no strategy absolutely guarantees against loss – or gain, for that matter. Diversification does give you better odds, however. No one can say for sure what the market will do, or when. Having different types of investments means that not all your investment will be lost on a downturn, and diversifying takes some of the guesswork out of finding the market segment that may rise, which gives you the potential to improve returns despite the risk factors.
You also need to realize that merely investing in different types of markets is not the same as risk diversification. Different asset classes may appear to be different, but each has various levels of risk. Not taking those factors into consideration could lead to your portfolio only looking like it is diversified, rather than truly being diverse. Having lots of different investments does not mean you are diversified.
Be Proactive, Not Reactive
The importance of diversification is amplified by the fact that if you don’t diversify first, and something happens in the market, by the time you – the average investor – reacts, it is too late. Being diversified by investing in not only different asset classes, but different risk categories as well, allows you to weather difficult market situations. You’ll be better equipped to recover as the market recovers. Don’t wait till the market is soaring or crashing to make your financial decisions. Evaluate your goals, determine your risk tolerance, and diversify as part of a long term plan, and not as a panicked reaction to the market.
Talk to a Financial Investment Expert
For over 40 years, StockCross has used cutting-edge technology and proven investment strategies to fit individual needs. StockCross is privately owned, so there are no shareholders to whom to be accountable. Our services are geared towards you, and our accountability is to you. If you would like to talk to one of our customer service professionals, call us at 800-225-6196 today!