Diversification Is the Name Of The Game
Diversification in the investment world is something which the professionals will always preach but few of the public actually follow. Some of the excuses include a lack of funds to invest, sticking to steady markets and 'I know what I am doing'. Never forget that pride comes before a fall!
Who would have thought that just over 12 months ago those with massive property gains would now be sitting licking their wounds and nursing substantial falls. Who would have thought that an investment in the UK banking sector would have seen your investment half over 12 months? These are just two areas of the UK economy which anybody would deem to be as safe as 'houses'.
The need to diversify has never been greater, whether this is by individual shares, pooled investments such as unit trust or managed funds. Advice should be taken at all stages because a mix of exciting, medium risk and boring investments is a must for any serious investor. Some may boast that they have made good money on individual shares but it just takes one dud and they could lose the lot.
Spreading the risk also allows different investments to benefit at different stages of the economic cycle, often offering opportunities to sell and reinvest proceeds. Many people also forget that cash in the bank is an investment itself as it does attract a varying degree of interest.
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