About this episode:
In this episode of The Australian Finance Podcast we’re not just talking about diversifying your investments, we’re going to cover the importance of applying the principles of diversification to all areas of your financial life.
Diversification is the practice of investing across different asset classes with varying levels of risk and reward. By mixing different kinds of investments within your portfolio, you can reduce the likelihood of a single event (or underperforming asset class) damaging your returns.
The most common way of explaining diversification is with an analogy that’s tired but true: ‘Don’t put all your eggs in one basket’.
“The only investors who shouldn’t diversify are those who are right 100% of the time.”
– Sir John Templeton
Resources:
- What is Diversification? | Rask Education
- Why Diversification Works in Life and Markets
- HTM: What is diversification? Introducing the Healthy Investing Pyramid
- MoneySmart: Diversification
- Research Paper: Is diversification always optimal?
- Research Paper: Diversification versus Concentration . . . and the Winner is?
- The Importance Of Diversification
- FutureLearn Course: Risk Management in the Global Economy
- What it means to diversify your portfolio (definition & examples)
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