Do not put all your eggs in one basket!

By BankBazaar | April 4, 2011

It is important to pursue the path of systematic savings, in order to avoid getting into a debt trap of a personal loan, home loan, car loan etc. But equally important is to, save your money into diversified asset classes.

Many times we come across various instances, for example, people looking forward to increase their property base, ignoring the fact regarding how many properties they might inherit in future. An unforeseen slump in the real estate market after a certain period of time can bring a huge downfall in your savings.

So, in order to avoid any kind of instances in future, it is very important to diversify your asset classes, as disproportionate increase in any asset class might affect your investment corpus. Each asset class has its own set of advantages and disadvantages linked to it, thus, making the need for diversification much more needed.

Your asset classes should include not only long term investments but also short term liquid funds as well. In case, you need an urgent requirement of money, investments in the real estate sector cannot provide you the needed finance at the time it is required as it is not a liquid asset class.

Try to liquidate any possible investments you can if you need to settle your loan, prior to purchasing any investments. Since, the burden of EMIs on your savings can reduce your returns, it is advisable to clear off your debts as soon as possible.

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