Diversity: A Boon for Investors

By | March 18, 2018

It’s hard to maximise your gains without diversifying your investment portfolio. Here’s why portfolio diversification can be a boon for investors.

People often opt for investments which they presume are stable and safe. We avoid taking risks and side with the solid, publically accepted plans. More importantly, we trust the investment schemes which are associated with the government or provided by it.

Some even opt for investments which depend on inflation in order to secure their money. The principal amount is kept as a safe haven and invested when there is no risk to it. Many good investors often regret playing safe and by the book when they look back upon their choices. They wish they had opted for a better result-oriented policy with good returns. Everyone wishes to eliminate mistakes and make the best possible decision but such insights are not of much use when taken note of in retrospect.

Most investors believe that the best way to surf through the investment market is to focus on avoiding all risks and maximise profit. They look for a strategy to avoid all miscalculations and for a route that leads to maximum earnings with minimum danger. A popular norm is to magically come into possession of a scheme which allows you to back down when you smell smoke and up your investment when the chances of getting profit increase.

They want both these scenarios to work exactly at the most opportune and correct time so that the best outcome can be obtained from any deal. Everyone wants a good investment return after all, which is many of our decisions are based on this one outcome.

In order to be able to benefit from this domain, one must be willing to welcome diversity because with more options you have better chances of emerging successful.

Bonus Read: Repay Your Education Loan Or Start Investing: Which Comes First?

Different investments plans have diverse policies and the way they each function is different from each other. It is a very common misconception that things sort themselves out eventually.

This is however also a very safe and bookish belief. You may wonder why a diverse collection of investment schemes is better than a staple, fixed one. The answer to this question is – the world today. Our environment, consumption trend, lifestyle, living conditions, everything is changing at a very fast pace.

A street may house a hundred different families each belonging to a different background and culture. In order to cater to everyone, a common plan may not be deemed suitable and effective. A good choice is selecting a plan based on the specifications which suit your personal interest.

Diversity investment may even be the next big thing in this globalised scenario. However, in order to embrace this one must give up on their pursuit of that one ‘perfect’ scheme which they believe will yield the maximum profit. An open mindset and the ability to experiment is quite essential if you decide to step into this area.

It isn’t surprising that investors are afraid of putting in their money based on wrong and unsafe decisions. We are made aware of this ordeal every step of the way and are advised to avoid making hasty plans. Most people and companies have their funds invested in schemes which are said to increase income on a steady basis. This practice has been followed for so long by so many people that nobody wants to leave their comfort zone and explore new avenues of investment.

Additional Reading: Tips For Ideal Portfolio Diversification

Whereas some global fronts overseen by fiduciaries offer pensions which will have to face questions if the diversity in the mix that they offer to the public is found lacking. They are deprived of the option of worrying about the fluctuating markets and or preferring the home market over the others.

The investors associated with the firms will not be happy about the unavailability of the different options and less opportunity to explore different aspects of the market. Diversity is one of the main principals for institutions which facilitate such policies these days. The investors and the organisations understand the importance of having a varied dashboard to fit each consumer’s demand perfectly.

Here, going for the generalised and safe-bound option of only focusing on returns will not be viewed as the most optimal choice. The demand for a free market is emerging as information is flowing from one channel to another.

The main aim of using a diversified portfolio is to not focus on getting safe returns but to optimise planning and plan better for risks. People often invest their funds in real estate. They buy property and continue pursuing this course of action believing that this is the best way of getting stable returns from their investments. They do not even consider the option of diversification because it is a concept which is left unexplored. They are so transfixed with the general norms that they are unable to see any negative aspects of their decisions.

Holding on to investment opportunities which have very few options can be restricting and may pose more risks than the investors first judged. It is difficult to think that one can be foolproof against any kind of risk. The scenario is not true no matter how many pre-emptive measures are taken.

One cannot use hindsight or foresight to completely eliminate the possibilities of risks in their investments. Everything goes through fluctuation at one time or the other. It is unreasonable to believe that property rates will remain stable and the returns will be procured uninterrupted without any hassle. Therefore, if the reason for sticking with traditional methods is security then it isn’t a very smart move.

Bonus Read: Stock Markets Climbing: Is It A Good Time To Invest?

In order to create new avenues for gaining money, it is wise to invest across different platforms rather than limiting yourself to just conventional means. Often unequipped dealers in the investment sector offer people inadequate policies which are accepted by investors because people do not want to join new ventures.

They would rather keep their money tied in limited sources because of how traditional they are. This leads to an unhealthy investment habit which should be substituted with a more diverse outlook and range. Therefore, it will be wise for investors to consider exploring the diversified market in order to promote better gains and more satisfaction.

Bonus Read: Understanding ‘Systematic Investment Plan’ (SIP)!

If you don’t know where to start then begin with a Fixed Deposit account. It’s safe, offers a decent rate of interest and is an excellent way to kick-start your investment adventure.

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit www.bankbazaar.com for the latest rates/offers.
Category: Investments

About BankBazaar

BankBazaar is the world's first neutral online marketplace for instant customised rate quotes on Loans, Credit Cards, Insurance and Investment products. Shop for financial products just like you buy everything else now - online.

Leave a Reply

Your email address will not be published. Required fields are marked *