How can you diversify your investment portfolio with your bank?

1 Choose a bank that offers investment advice

One of the benefits of diversifying your investment portfolio with your bank is that you can access professional advice from your bank's financial advisors. They can help you assess your current situation, identify your goals, and recommend suitable investment options based on your risk profile and preferences. They can also monitor your portfolio performance, provide regular updates, and suggest adjustments as needed. To choose a bank that offers investment advice, look for one that has a dedicated wealth management division, a wide range of investment products, and a transparent fee structure.

2 Invest in different asset classes

Another way to diversify your investment portfolio with your bank is to invest in different asset classes, such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), certificates of deposit (CDs), and money market accounts. Each asset class has different characteristics, such as return potential, risk level, liquidity, and tax implications. By investing in different asset classes, you can balance your portfolio and reduce the impact of market fluctuations on your overall returns. Your bank can help you invest in different asset classes by offering various accounts, platforms, and tools that allow you to buy and sell securities, access market information, and track your portfolio performance.

3 Consider alternative investments

A third way to diversify your investment portfolio with your bank is to consider alternative investments, such as real estate, commodities, private equity, hedge funds, and cryptocurrencies. Alternative investments are typically less correlated with the traditional asset classes, meaning they tend to behave differently in response to market conditions. This can help you enhance your portfolio diversification and potentially generate higher returns. However, alternative investments also come with higher risks, fees, and complexity, so they are not suitable for everyone. Your bank can help you consider alternative investments by providing access to specialized funds, platforms, and advisors that can guide you through the process.

4 Diversify within each asset class

A fourth way to diversify your investment portfolio with your bank is to diversify within each asset class, meaning that you invest in different sectors, industries, regions, and companies within the same asset class. For example, within the stock market, you can invest in different sectors, such as technology, health care, energy, and consumer goods. Within each sector, you can invest in different industries, such as software, biotechnology, oil and gas, and retail. Within each industry, you can invest in different companies, such as Apple, Pfizer, Exxon Mobil, and Walmart. By diversifying within each asset class, you can reduce the specific risk associated with a particular sector, industry, or company, and take advantage of the growth opportunities in different areas. Your bank can help you diversify within each asset class by offering a variety of funds, ETFs, and portfolios that cover different segments of the market.

5 Rebalance your portfolio periodically

A fifth way to diversify your investment portfolio with your bank is to rebalance your portfolio periodically, meaning that you adjust the weights of each asset class and investment in your portfolio according to your target allocation and risk tolerance. Rebalancing your portfolio can help you maintain your desired level of diversification and avoid overexposure or underexposure to certain assets or markets. Rebalancing your portfolio can also help you lock in profits, cut losses, and take advantage of new opportunities. Your bank can help you rebalance your portfolio periodically by providing automatic rebalancing services, alerts, and reports that can help you monitor your portfolio performance and make informed decisions.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?