Diversification

Risk is an intrinsic part of investing. While you can’t avoid it, there are ways you can manage it. Diversification is one of these strategies, and generations of investors have used it to reduce investment risk.

Diversification involves spreading your money across a range of different investments, depending on your goals, the amount of time you have available to invest and the amount of investment risk you’re comfortable with.

Diversification is important because every type of investment has its ups and downs. Owning a diverse range of investments should help you achieve smoother, more consistent investment returns over time.

The more ways you diversify, the more you can potentially reduce your risk. For example, you can invest:

• Across different asset classes (e.g. cash, fixed interest, property and shares)
• In more than one investment within each type (e.g. invest in several different industries and companies when investing in shares)
• In more than one type of fund, and more than one fund manager, when investing in managed funds
• Inside and outside of superannuation.

If you’d like to find out more about creating a diversified investment portfolio, you can book an appointment online to organise your complimentary, no-obligation consultation with a Commonwealth Financial Planner.

• Important information
  1. The information contained on this web page is of a factual nature only and is not intended to constitute financial product advice. It has been prepared by Commonwealth Financial Planning Limited without considering your individual objectives, financial situation or needs. You should consider its appropriateness in light of your circumstances and consider seeing professional advice relevant to your individual needs before making a decision based on this information. Commonwealth Financial Planners are Representatives or Authorised Representatives of Commonwealth Financial Planning Limited ABN 65 003 900 169, AFSL 231139, a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.
  2. Investment products are subject to investment risk, including the loss of income and capital invested. Past performance is no indication of future performance.