Thursday, October 21, 2010

How to Diversify Your Investments?

What is diversification? Basically it is part of risk management as the golden rule says "don't put all your eggs into one basket"

Click here for a very good article from Schwab.com.

I particularly like this table - it gives you the insight on diversification:










The basic of why we do diversification:-
  1. Spread the risk - no single asset class is good for long term
  2. Spread the risk - don't put too much in a single company unless you can control them.
Even if you have only RM100,000 - you still need to diversify it probably to ensure the "safety of principal".