Ever heard that adage that goes “don’t put all your eggs in one basket”? Well, that right there is the brainchild of diversification.
Diversify actually originates from a Latin word “Diversus” that loosely translates to distribution, variety, spread or even stretch.
Nothing is certain, especially when business is concerned but having a diverse investment portfolio puts you at an advantageous position. Expanding your reach boosts your chances of success in the ever changing world of business and society at large.
As a sport lover, you might find that you have exclusive interest in say, soccer despite the plethora of sport activities in existence. Thus, limiting yourself to knowledge and consciousness of one sport when you can derive pleasure from a bunch of others like Basketball or baseball. Diversifying your interest gives you variety and more means of excitement.
Investment and business is no different. The biggest risk in life is not taking risk but having a varied investment portfolio means that you spread your risk among various entities of your choice. This means you’re taking a calculated risk in a variety of assets/entities, rather than sticking to just one, leading to an increased potential of earning.
In an article by MARKETSNACKS called “Why diversify”, the author discusses that though diversifying is not a promise of success, it reduces the potential damage that could arise from rigidity in investment.
Creating a diversified portfolio requires planning and careful execution. You can achieve a lot simply through spreading your investment tentacles and clinging on to a variety of opportunities just waiting to be grabbed. With that said and might I add, some luck on your side, you’re on your way to the land of positive results.
“The only investors who shouldn’t diversify are those who feel they are right 100% all the time.” – Sir John Templeton.
Those people feel their knowledge about things are always accurate, which leaves them not doing what should be done, it’s better to take risks by getting things done than not taking any at all.
Diversify and intensify, that’s the future.