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5 strategic tips for successfully diversifying your portfolio

When it comes to being a savvy investor, diversifying your portfolio is the first step towards protecting yourself and your financial well being if ever the market crashes.

If you’ve been wanting to diversify, it doesn’t have to be as difficult as you might think.

It can actually be rather straightforward (particularly if you take a few basic things into consideration).

Here are several strategic tips for you to take action and turn your portfolio into a diversified fortress of financial security.

Keep it simple, invest in dividend-paying companies

The goal behind diversification is quite simple. It should be to gradually build an investment portfolio made up of various types of investments. This can help ensure higher returns while minimizing risk.

The first step to this is to invest mainly in established, dividend-paying companies and spread your money across most of the main economic sectors.

Keep things simple, don’t go all-in on stocks that are currently in the limelight, because these stocks are usually not the safest. You might never know where the next super stock might be hiding. So, diversification can help increase the possibility of latching onto a market superstar. These gems can end up producing two or even five times more profit than the average stock.

Find a financial advisor to help you manage your finances

Financial experts are there for a reason. They can help you identify the best industries, and advise you on the next step in your investment journey. It’s never a bad idea to find someone who can guide you, right? Financial advisors can evaluate your portfolio’s health, help you set milestones, inspect your company’s financial statements and estimate how big of an investment should be made at any given point in time.

Take multiple sectors into account

Every business on the face of the Earth probably fits within a specific industry. There are so many sectors to delve into in order to diversify. If you are really interested in protecting your assets, choose a wider range of sectors to invest in. There are a number of prominent industries that have plenty of promising companies, including the financial services sector, technology sector and healthcare industry. By investing in multiple sectors, you can help safeguard your portfolio and remain financially stable even if one sector starts to experience a decline in performance.

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Don’t just focus on stocks

There are so many investment vehicles that you can consider if you’re looking to diversify your portfolio. The most common option would probably be the stock or share market. However, there are a lot more out there.

Annuities can bring you great opportunities. With contracts between yourself and insurance companies that help ensure that the firm makes periodic payments to you once conditions have been met, you can even create your own mutual fund by investing in several reliable companies.

Index funds are probably the next best. Bond funds can offer monthly payouts. Commodities are great too because they provide a means for investors to manage market volatility (even though their returns are a little different from conventional vehicles like stocks and bonds).

Explore Offshore markets

This is another move that many new investors might not think about. Offshore markets essentially allow you to take advantage of asset classes that might not be available in other parts of the world. These can include digital currency markets or markets that perform well in certain jurisdictions. If, for instance, you have real estate investments in more than one country, your diversification can help you reap rewards from one real estate market while another struggles to take off. Consider taking to the global stage in order to try and secure your finances.

Last but not least, one of the most important steps when it comes to diversification is to start as early as possible. With proper preparation from the beginning, you can build a stronger portfolio in a shorter amount of time. Take note of your current investments, identify the types of risk you are prone to and which ones you’re comfortable with at the moment.

It is best to seek professional financial advise from experienced and knowledgeable advisors than to be fumbling on your own and making financial decisions based on Google searches and hearsay. Get in touch with us for a review and get your portfolio diversified for a better management of your wealth.

Hampton Wealth specialises in sourcing high quality, listed bonds and funds with a focus on providing returns in excess of normal off the shelf investment options.

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