5 Tips to create a diversified portfolio

Published : 20 Apr 2023

Every sector has a cycle. Make sure to study these cyclical movements to capitalize by distributing the investment accordingly. For example, people who only invested in tech stocks in the current market scenario would have incurred huge losses in comparison to those who must have invested not only in tech but other sectors too.

1.  Study the sectors and distribute

Over time, the size of the holdings in your portfolio will change based on how the investment performs. Holdings with strong performance will become a greater percentage of your total portfolio, while the worst performers will see their weight decline. You can rebalance the weightage between them to optimise the portfolio returns. This is can be done quarterly too.

2.  Periodic rebalancing of the portfolio

In today’s times, global markets are easily accessible. Thus, one must take advantage of this and can make investments in various economies to mitigate economic and currency risks.

3.  Think globally

It’s never advised to hold only one class of asset. Historically, when equities rise gold and bonds returns dim down and vice versa. Thus, to protect your money from sudden crashes, its wise to allocate your money to different assets.

4.  Diversify the asset class

Always keep some cash in handy. Its true that cash does lose its value over time but when the market crashes, you can avoid losing out on that money and also get a chance to average out on the investments that are available at a cheaper price.

5.  Don’t invest all the money