The Importance Of Diversification

Discussion in 'Stock Market Forum' started by longtermbull, Mar 13, 2017.

    Mar 13, 2017
  1. longtermbull

    longtermbull Administrator Staff Member

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    In a perfect world we would all have 100% of our funds in the top performing sectors and the best performing shares. This would ensure that we maximise our income going forward and could look forward to a fruitful retirement. However, in the real world diversification is the way forward and it is vital that you do not put all of your eggs in one basket and take too many chances. So, why is diversification so important?

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    longtermbull, Mar 13, 2017
    longtermbull, Mar 13, 2017
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    2. Oct 25, 2017
  2. kirtimeliwal

    kirtimeliwal Senior Investor

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    Diversify investment portfolio is beneficial because if one stock is not performing well then still traders have other chance to gain profit. Divide investment amount in small amount and invest it into different platform in order to gain more profit.
     
    kirtimeliwal, Oct 25, 2017
    kirtimeliwal, Oct 25, 2017
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    3. Oct 25, 2017
  3. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I'm big on diversification myself.

    If I was as smart as Buffett, Icahn, and Peltz and was able to generate 20-30% unleveraged returns per year over many decades by having most or all of my money in 8-10 stocks, I'd do so. But since I'm not quite that smart, I spread my money out far more than that.
     
    JR Ewing, Oct 25, 2017
    JR Ewing, Oct 25, 2017
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    4. Dec 1, 2017
  4. rakhi

    rakhi Active Member

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    Diversification is a technique that reduces risk by allocating investments among various financial instruments, industries and other categories.
     
    rakhi, Dec 1, 2017
    rakhi, Dec 1, 2017
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    5. Dec 1, 2017
  5. Chartman

    Chartman Senior Investor

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    It is quite easy to make money in the good times but once the markets turn a lot of inflated share prices are left exposed. While I am always tempted to invest in just a handful of stocks, I am conscious that as I get older there will be a need to protect my capital a little more through diversification.
     
    Chartman, Dec 1, 2017
    Chartman, Dec 1, 2017
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