INVESTING 101 - DIVERSIFICATION/ DON'T PUT ALL YOUR EGGS IN ONE BASKET
When you start investing or thinking of investing!
Here's a very simple concept to help you reduce your risk and enable you to sleep better! 🥳
Don’t put all your eggs in one basket?
Heard it before? it’s created by this dude, Miguel de Cervantes who wrote Don Quixote in the early 1600s.
This is an awesome metaphor to help us reduce our risk in life and especially in building wealth!
It is unwise to put all your eggs in one basket because if you do, and you drop that one basket, or the basket gets knocked over, all your eggs will break and you will lose them all in one shot.
However If you put your eggs in several different baskets, the chances of losing them all in one shot will be greatly reduced! (Yay, I should totally do that)
After we decide to begin on our investing journey, consider diversifying your Investments!
If you’re going to DIY your investments:
Even the professionals will not claim to know all 500 companies in the S&P500 (a collection of 500 Large US companies).
So you can consider limiting the number of stocks you purchase to between 20-40 with no more than 4-5 within each sector of the market!
Also choose companies that you're more familiar with so that you'd have an easier time assessing them and considering whether or not to put it in your own portfolio!
If you don’t want to DIY:
If you don’t want to spend hours reading up and completing your due diligence required for proper diversification, consider delegating to a manager whether it be a mutual fund or unit trusts.
In a nutshell,
Don't put all your eggs in the same basket!
Diversify, reduce your risk, have better sleep!
You are awesome so if you need help I'll be there for you! 🔥
If you'd like to start investing and want to engage a trusted advisor, book a discovery call with me so we can find out your goals and what's the most appropriate solution!
Disclaimer: All investments have their own risks, please do your due diligence before making any decisions.