{"id":3088,"date":"2016-07-04T01:12:34","date_gmt":"2016-07-04T01:12:34","guid":{"rendered":"https:\/\/raizinvest.com.au\/investors\/diversification-the-key-to-success\/"},"modified":"2024-04-23T07:17:32","modified_gmt":"2024-04-23T07:17:32","slug":"diversification-the-key-to-success","status":"publish","type":"post","link":"https:\/\/raizinvest.com.au\/investors\/blog\/diversification-the-key-to-success\/","title":{"rendered":"Diversification: the key to success"},"content":{"rendered":"
\"image\"<\/figure>\n

In
\nthe 2004 documentary Supersize Me, Morgan Spurlock eats food only from
\nMcDonalds for a whole month. What was the result? He gained weight (a lot of
\nit), experienced mood swings, and frequent headaches.<\/p>\n

\u201cLike
\nyour diet, your share portfolio generally suffers if you just choose one stock
\nand don\u2019t mix it up\u201d<\/i><\/p>\n

Now
\nwe all love the occasional Macca\u2019s every now and again, but it\u2019s probably safe
\nto say that you should mix it up and maintain a balanced diet. Our body stays
\nhealthy that way.<\/p>\n

Like
\nyour diet, your share portfolio generally suffers if you just choose one stock
\nand don\u2019t mix it up. Choosing different stock types to work together is one of
\nthe most important things to keeping your portfolio healthy.<\/p>\n

\u201cBy
\nspreading out your investments, you avoid putting your eggs in one basket. If
\nthat basket breaks, you can\u2019t have your omelette, that\u2019s a risky situation\u201d<\/i><\/p>\n

For
\neating we call it a balanced diet, for investing we call it Diversification.
\nThis blog will tell you a little bit about diversification, how it works, and
\nhow you can achieve it.<\/p>\n

How
\ndoes diversification work?<\/b><\/p>\n

Diversification
\nbasically means spreading your money across a variety of different investment
\ntypes. Often these investments perform differently at different stages of the
\nbusiness cycle, or have different correlation with each other.<\/p>\n

By
\nspreading out your investments, you avoid putting your eggs in one basket. If
\nthat basket breaks, you can\u2019t have your omelette, that\u2019s a risky situation.<\/p>\n

For
\nexample, take the example of stocks and bonds. During a bad period for the
\nstock market, we tend to see bonds perform better than stocks. If you had a
\nportfolio full of stocks and no bonds at this time, you\u2019ve just missed out on
\nthe action. By diversifying you can avoid big shocks to your portfolio.<\/p>\n

But
\nit\u2019s not just different asset classes that behave differently. Healthcare
\nstocks will perform differently to Oil stocks, Oil stocks may behave
\ndifferently to Tech stocks, Foreign Tech stocks may behave differently to
\nAustralian ones. There\u2019s many different investment types to diversify.<\/p>\n

How
\ncan you diversify?<\/b><\/p>\n

ETFs
\nare a great start\u00a0(What is an ETF?)<\/a>.<\/p>\n

\u201cWhen
\nyou invest with Raiz, you diversify\u201d\u00a0<\/i><\/p>\n

With
\nETFs, you can spread out your investments over hundreds of different stocks.
\nThere are ETFs for local stocks, foreign stocks, bonds, and much more.<\/p>\n

When
\nyou invest with Raiz, you diversify. Each of the 5 portfolios offered by Raiz
\nare diversified across 5 different ETFs, different countries, and asset
\nclasses.<\/p>\n

Our
\nportfolios were designed with diversification in mind, and to give the investor
\nthe best expected return for the amount of risk they\u2019re willing to take
\non.<\/p>\n

So
\ndon\u2019t have Macca\u2019s for every meal, and sign-up to invest with Raiz today. For more information on Raiz fees, click here<\/span>.<\/a><\/p>\n

 <\/p>\n

Important Information<\/strong><\/span><\/p>\n

The information on this website is general advice only. This means it does not consider any person\u2019s investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the Raiz product.<\/p>\n

The information in this website is confidential. It must not be reproduced, distributed or disclosed to any other person. The information is based on assumptions or market conditions which change without notice. This will impact the accuracy of the information.<\/p>\n

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz.<\/p>\n

Past return performance of the Raiz product should not be relied on for deciding to invest in Raiz and is not a good predictor of future performance.<\/p>\n","protected":false},"excerpt":{"rendered":"

In the 2004 documentary Supersize Me, Morgan Spurlock eats food only from McDonalds for a whole month. What was the result? He gained weight (a lot of it), experienced mood swings, and frequent headaches. \u201cLike your diet, your share portfolio generally suffers if you just choose one stock and don\u2019t mix it up\u201d Now we […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[1],"tags":[],"yst_prominent_words":[]}