In investment, diversify your portfolio.
In other words, place your money in a variety of different investments.
The idea of divesification is not to put all your eggs in one basket. A diversified portfolio reduces the risk for a given rate of return.
You should distribute your assets accross a variety of asset classes. For Indian households, these are (ranked in order of importance, 1 is most important and so on..):
1. Residential Property
2. Fixed Deposits with Banks
3. Equity Shares
4. Gold ( in ETF )
5. Commercial Property
6. Capital for Trading in Shares / F&O
In addition, the entire family MUST carry mediclaim and earning members MUST have life insurance.
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Diversification, the typical way people practise, is a hedge against ignorance. Rarely would you find a lot of wealth being created by diversifying into different assets, unless all of them are high return assets (in which case diversification reduces volatility of returns).
Instead, concentration or focus creates wealth. Sure, it comes with the risk of failure. But any significant wealth is created by learning how to concentrate and focus on an asset of choice rather than by diversification.
Business people dont diversify from the start. They focus and build wealth upto a level. Then they diversify to keep their wealth. Concentration creates wealth, diversification preserves it.
As Warren Buffet says, "Diversification is only required when investors do not understand what they are doing".
It may not be a bad idea to not hide behind the shield of "I don't understand investing, so let me diversify", and learn to invest instead.
So put all your eggs in one basket and watch the basket like a hawk.