How to diversify an investment portfolio

How to diversify an investment portfolio

We recently saw what is diversification, along with its main advantages and disadvantages. As you already know, diversification is the simplest and most effective method to avoid the concentration of risk in our portfolios and our assets. Of course, you have to be aware that diversifying is not enough, it is necessary to do it well if you do not want to put your assets at risk. In this article you will see how to diversify an investment portfolio effectively through the 6 dimensions of diversification.

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  • dotcom bubble and the housing bubble made investing in the stock market a risky sport for the inexperienced.

    Temporal diversification

    Therefore, if you are a newbie, my advice is that you do not rush to put all your money in the bag at once. I recommend that you go little by little to avoid temporary concentration. Remember this is not a sprint, but a marathon.

    Personal diversification

    Personal diversification is based on diversifying our investments with respect to our personal sources of income. Specifically, my recommendation is not to concentrate our investments on the company or sector in which we work.

    In this case, it may be something that may seem counterintuitive, as there may be a conflict between personal diversification and circle of competition. However, I continue to opt for diversification. As I often say, I'd rather lose opportunities than lose money.

    And you, how do you diversify?

    As you can see, I am a strong advocate of wealth diversification in general and investment portfolios in particular.

    Since there are often conflicting opinions on this topic, I encourage you to share your opinion on diversification.

    Are you more of concentrating or diversifying your portfolio?

    Do you invest in the whole world or only in part?

    Do you invest in other assets beyond the stock market?

    Do you prefer to invest in the sector in which you work or do you prefer to avoid it?

    I await your comment! 😉

    To finish, I remind you that you want to learn to invest in the stock market with the safest and most profitable method in the long term, I encourage you to take a look at my Investor Club. In it, you have more than 40 hours of theoretical and practical training to learn how to invest in the stock market from scratch. Take advantage of the introductory offer! It will be your most profitable investment. 😉