Friday 9 November 2012

Diversification Builds a Buffer Against Financial Crisis

One thing that is for sure, is that when adopting strategies to diversify your portfolio, the investments that you select must create a buffer against financial crisis, political unrest and economic uncertainty. Furthermore, these profitable results must be produced consistently, and over an extended period of time.

A buffer against financial crisis is best be achieved by investing in a number of different asset classes. This approach works to smooth out investment performance over a long period of time, as some assets in the portfolio will perform well in changing markets; while others will not.

The most important thing to recognize, is that portfolio diversification as a hedge works well, especially when strategies including investments in a major asset class; such as hard assets. Whether it's through physically owning a commercial building or bars of gold, investing in shipping containers or land, hard assets have demonstrated that they can be a great long term addition; to any investor`s portfolio.

5 comments:

  1. When it comes to diversifying a portfolio there are always many factors that have to be considered. The most important two factors are what will go in at the start and how much money will be generated in the end.

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  2. It is important that investors have diversified portfolios. The theory being that the strong performing options will guard against any negative returns from the weak ones. Better yet, just fill it from the start with only strong ones to ensure constant and consistent returns.

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  3. The best investment advice to give when deciding what range of investments to include in a diversified portfolio would be to include ones that have demonstrated they can deliver consistent results even during the present uncertain times, like hard-assets. This way you could be certain they will generate even better results in the future when times improve.

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  4. The market is always changing and it makes it difficult to predict what investment to include in a well diversified portfolio. It makes sense to consider hard-assets because of their positive track record even during difficult times. An investment portfolio that only contains a range of different, well-performing hard-assets would be ideal.

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  5. It is wise to investing in something that constantly delivers positive returns during good times and bad. Hard-assets seems like the best way to go. It not only makes sense, it makes dollars too.

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