Diversification
By Fred on Jun 8, 2008 in Investing, Personal Finance, Stocks and Bonds
I have already decided to invest. But why diversify? Sorry but I just use foundation of hackneyed phrase on “Do not put all eggs in one basket.” Diversify your investment means that the risk of having a disability or loss is reduced because not all your capital is affected by the same external factors. To give an example. If your money is in pesos, with an economic crisis will end any possibility of gain. But if you have a higher percentage of other currencies, even that money may come out of this crisis.
Stock markets are always connected, either proportionally or inversely proportional: the gold has to rise when the shares fall, cane sugar increases its value while the oil price rises. Finally, one should seek to diversify and diversify what diversified:
Diversified by region, by currency, by institution, by market (debt, RV, etc.), By time and by any means by which you divide your capital with the objective of not only not have all the eggs
in one basket, but have each egg as far as possible.
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