Portfolio Investing

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• Introduction to portfolio investing
• What is risk?
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• What should my investment portfolio look like?
• Resources and information you could consider

Introduction to portfolio investing

One of the secrets to successful long-term investing is portfolio investing, or diversification. These are big words to use with your friends (or your financial adviser), but they're big words which simply mean "not putting all your eggs in one basket".

There are two primary reasons for portfolio investing or diversification:

1. Protecting your capital, and
2. Ensuring you're able to maximise your return and minimise your risk.

Spreading your investments makes it unlikely that you'll lose your savings in a single hit. In 1986/87, it was tempting to have all your money in the stock market. Those who did, though, lost most of their capital in a single week. There are many other horror stories of individuals and families investing everything in a single investment. Unfortunately, in these cases, if it goes wrong, you lose the lot.