How to diversify your investment portfolio?

Investing your money for future returns is a healthy practice. Investing your money at the start of your career is an even more healthy practice.

Why?

The more you invest when you are young, the more are your chances of building a corpus of funds. This way you retire with peace and contentment. Most people make a blunder of not investing early to be more precise….at the start of their career. They start investing later in their lives on an average in the late ’30s.

While you still have a lot of time to go, your financial build will be less strong than if you start investing early.

Benefits of investing early-

• You are young and can take risks.
• You have fewer or no dependents.
• Your overall spending habits will improve.
• Compounding is helpful in the long run.
• Your overall quality of life will improve.

However, the key to creating a good and healthy corpus is to diversify your investment portfolio –

The portfolio should have different investments –

The number one rule of investing is never to put all your eggs in one basket. It is not a risk worth taking. Investing in ETF and Mutual Funds is your best bet. Index funds are also an excellent choice and are one of the strong options to consider.

Ideally, what should be in your diversified investment portfolio-?

• Domestic Stocks- provide a great opportunity in the long run.
• Bonds- offer regular interest income and are less volatile
• Short-term investments- they offer stability but are not as liquid as market funds.
• Real Estate funds- one of the popular forms of diversified investment. Surely, protection covers especially against inflation and in the long run.
• Asset-allocation funds – one of the most recommended if you are looking at diversifying.

Have a portfolio build with varied risks –

You need to invest in those options where there are different rates of returns. This helps in gaining substantially and can act as a cover if at all you incur losses in other investments.

One of the options here is to invest in foreign stocks. They are the prime source of diversifying your investment portfolio and seize bigger opportunities. It helps you to take advantage of different market cycles in different countries and build a strong corpus.

Rebalance your portfolio –

Diversification is not a one-and-done task. It requires frequent monitoring to keep a continuous flow of returns. You need to make changes accordingly as and when your financial goals or strategies change.

It is recommended you should diversify your portfolio at least twice a year.

Mastering the game of investing requires investing smartly and most importantly at the beginning of your working age. Disciplined, regular, and diversified investments will add up to a massive protection cover in your golden years for you to sit back and enjoy life.