NASDAQ:NATI WHAT IS DIVERSIFICATION ? WHY ITS IMPORTANT Diversification means distribution of your capital and investments in different assets classes. Why its important you ask ! 1. It reduces of Risk of overall Portfolio. 2. It provides you option to invest in multiple opportunities. It is very much possible that what you invest might not work and what you not selected makes big returns. So If you diversify you can catch broader market opportunities. 3. It helps you to bet small. Reduce the changes of 1 Big loss or 1 bad decision to Ruin your overall Portfolio or damage your returns badly. 4. Small Size helps you make calculated risk and return decision. You are most likely to make right decisions cut losses small and thus keeping drawdown with in recovery limits. Overall it helps you to make good returns with good decisions not just luck or gamble. Keeping you safe and building you safe solid trading practices especially when you are new in the markets.
So if its so important then. HOW TO DIVERSIFY PROPERLY How do we do it. It depends on your few factors you can consider before investing. 1. 1st of all on your Risk Tolerance and Reward expectations. Decide if you are high risk taker or keep it safe guy. Decide accordingly. But generally Keep your open risk less and 10-20% max at any time. 2. Invest in safe asset class for safety and some in High Risk Reward assets like stocks crypto and other opportunities . 1 Rule is Decide according to your age. if you are 20 invest 20% in Debt and 80% in Equity. 3. Keep your High Risk unregulated investments less than 5%-10% max. Dont go all in in Crypto. 5% -10% in Enough. But thats my opinion. Decide yourself for you.
So thats it for this Education Blog #4. Comment your thoughts. whats your experience. Thanks for Reading.
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