Diversification is probably the most commonly quoted piece of investment advice. Yet unfortunately, time and time again people tend to over concentrate their investments in a specific stock or asset. The idea behind diversification is that it spreads out risk and therefore helps mitigate all kinds of developments, especially negative shocks. The reality is that no asset, stock, region, sector or currency will outperform all the time. Multi-asset funds, which divide their investments between different assets, such as stocks, bonds, cash, & property aim to reduce permanent loss of capital.
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The key to everyday investing is diversification, which means owning different types of investments to spread out the risk. You definitely want to own stock index funds because stocks over time have always offered the best return.
You need investments that can do well when...
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