Rule 6: Diversify your investments
The saying "Don't put all your eggs in one basket” is so true.
One of the most common mistakes made by investors is to have too much money invested in one single asset or one asset type. The risk is that if that one asset (or asset class) fails to perform, a substantial portion of your portfolio is affected.
Assets move in different economic cycles – this year's best performing investment becomes next year's worst. It’s very difficult to know what the best performer will be.
The best way to reduce the risk market fluctuations present is to invest in a number of different asset classes, countries and companies. This will help reduce risk, smooth and increase your returns.
Diversification can be easy
One way to diversify your investment is through a
managed fund - and you can start with as little as $1,000.
In a managed fund, the experts decide how much should be invested in each asset class. In effect, they ‘manage’ the funds and decide which countries, industries and companies to invest in.
There are over 3,000 managed funds available that you can invest in Australia. Each has a different design, purpose and cost. Ask your Count adviser which funds suit your goals.
Find out more about investing in managed funds and how they can assist with investment diversification.
Go to Rule 7: Pay less tax
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As at
1 May, 2006 Doc Owner: < > |
