Wealth in Words

Common investment knowledge suggests that “you shouldn’t put all your eggs in one basket.” In effect, this phrase is attempting to convey that you need to diversify. In the context of your finances, diversification is not just placing your assets into random buckets with the hope that nothing bad will happen. Instead, you need to allocate your assets in an optimal manner to achieve your desired results .   Diversification for Investing The right mix of diversification  will be unique to each investor based on your preferences for risk and return. Accordingly, determining the appropriate blend of assets is the starting point in building a diversified portfolio. As an investor you may be more risk seeking than others who are more risk averse and yet an optimal portfolio  can be built for both preferences along the continuum of risk and reward. Additionally, throughout your lifetime the diversification of your portfolio will naturally change. That is