An Investors View of Diversification

September 13, 2016

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We recently published an article discussing what diversification is and why we believe it’s important to investors.

As a follow up, we spoke to Gillian Keith, an investor of ours, to get her views on diversification and whether she believes a new investor is aware of the role it plays within investing.

How did you learn about diversification within an investment portfolio?

I’ve learned about diversification through my own research and through the advice of some financial advisors over the years.

What do you feel are the benefits of diversification?

The basic concept of not putting all your eggs in one basket makes clear sense to me. As I understand it, it seems to be the most logical way of spreading risk and not exposing oneself to one type of investment.

How important is the level of diversification used within a portfolio to you?

Diversification is important to me, and eases my worries when I consider the volatility of the markets in the wake of unsettling world events like the Brexit vote, terrorist attacks and natural disasters.

Do you believe that a new investor will realise how important a role diversification plays in investing?

I think anyone who is serious about investing their money should take time to do some simple research about strategies. Learning about basic terms, ideas and options will help new investors get the most out of their chosen investment vehicle.

What would you say to someone considering building their own portfolio of stocks and shares?

I would always suggest that investors read as much information as possible about what they are choosing and why. Consider how much you want to invest, for how long and what kind of risk you are willing to accept.

It is necessary for you to understand the term diversification so that you can choose an investment strategy that you feel comfortable with. With our True Potential Portfolios, clients are invested in a portfolio that uses multiple layers of diversification with the aim of minimising risk and maximising returns.

Your capital is at risk. Investments can fluctuate in value and you may not get back the amount you invest. Past performance is not a guide to future performance. Tax rules can change at any time.

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