Diversification Reconsidered

A vital principle of modern finance is that investors should diversify their portfolios. Diversification in today’s world cannot be over emphasized, the more you diversify the better your chances of increasing your wealth.

“Diversification is a key investment strategy for reducing systematic risk in a portfolio while maintaining levels of expected return” – Investopedia

The first question you might want to ask is, how does diversification of funds work? Simply put, the act of investing your funds into various stocks, bonds and securities, rather than investing all your funds in a single place. By spreading out your funds, you lower the risk of losing all your investments at once.

With diversification, you can reduce the risk and volatility of your assets, it is advisable to go for individual stocks because general market risk affects almost every stock so it is only wise to diversify your funds among different assets.

It should be noted that diversification can however lead to poor performance if badly managed, this can be due to more risk, wrong portfolio and asset advice and higher investment fees. This is why at BlackCOD Asset Management Limited, we render the best professional advice and service to our customers to maximize the reach of their wealth.

The benefits of diversification are numerous especially in our ever-evolving world, there is always something new on the block to invest in provided due diligence is done to ascertain the risk factor of such investments.

Here are a few benefits of diversifying your money;

• Reduce volatility
• Expose you to more opportunities for return
• Maximizes the risk of loss to your overall portfolio
• Safeguard you against adverse market cycles and many more.

With the above benefits and even more, you should reconsider diversification. Spread your tentacles beyond just saving and investing all your money in a single asset. The world is fast changing every other day, but like they say, ‘when tough times come only tough people last’. 

Such lasting victories will only come with diversification.