Diversify your investments

By You and Money

Over time, investment markets constantly change and nobody can predict the future. This is why people say: “Don’t put all your eggs in one basket”. So to reduce your exposure to risk, it’s a good idea to diversify your investments.

Diversification is when you invest your money in different ways. By spreading your money across a range of investments, your portfolio is safer from dips that might happen in different sectors of the market at different times. If one investment type loses value, you have a chance that others will perform better and you won’t have a big loss.

You can diversify by putting your money into various types of investments, such as shares, term deposits and property. Or you can diversify within one type of investment, for example putting all your money into the stockmarket and buying shares in each of the 11 sectors. You can also diversify within a managed fund.

How you choose to diversify your investments will depend on how much you have to invest and your attitude to risk.

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