4 Tips To Help You Diversify Your Investment Portfolio

Diversification is not a new concept; it is a safeguarding measure that any investor worth their salt implements. Investing well is about planning ahead and diversifying before it becomes a necessity. Reacting to market changes in real-time is often too late to make any real difference to the health of your investment portfolio, which is why diversifying is so important. Read on for the tips you need to help you diversify. 

Spread the wealth

This may seem obvious because diversification as a concept is all about spreading the wealth. However, it is worth mentioning. You should never put all of your money into one stock or even one sector. There are a lot of different forms of investments that you can consider, and to create a healthy investment portfolio, you should consider curating a healthy mix of multiple different forms from stocks to property to bonds. Although that being said, make sure that your portfolio remains manageable -there is no point in overstretching yourself with too many investments that you don’t have the time or resources to keep up with. 

Seek help

If you are looking to make investments in a sector that you aren’t particularly knowledgeable about, then you should definitely consider seeking outside help. You could even invest through the funds of a professional investment firm. They then do the hard work for you in terms of measuring the viability of your choices and your potential returns. For example, Oxford Capital utilise the Enterprise Investment Scheme which invests in a portfolio of emerging businesses in a variety of leading sectors. Their investment team have over 50 years of combined experience; in short, their experience can help diversify your portfolio through the EIS scheme. 

Build your portfolio

You don’t have to build your portfolio overnight. In fact, that is not possible for most people. Instead, you should add to your investments and build your portfolio on a regular basis. This can help you to smooth out the peaks and troughs created by market volatility. The idea is that your potential risks are lowered by investing your money over a longer period of time. Using this strategy, you can also buy more shares when the prices are low and fewer when the prices rise. 

Know when to get out

Buying and holding investments until you need them are perfectly sound strategies; however, just because your investments are on autopilot, ticking away, doesn’t mean that you should simply ignore the forces at work.  You should always do your best to stay current with your investments and keep up-to-date with any changes in the overall market conditions. In addition, you should want to know what is happening to the companies that you have invested in. In doing so, you will have a better idea of when you need to cut your losses and get out while the going is good. 

Summing up 

Investing can definitely be fun, but it should also be educational and informative – not to mention rewarding. You need to be disciplined in your approach, diversify your portfolio and strategise properly to ensure your success whilst remaining aware of the risks associated.