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Dos and don'ts of diversification

Diversifying your portfolio across different assets can help to mitigate downside
Dos and don'ts of diversification

If you’ve built up a decent amount of wealth you’ll want to at least preserve what you’ve made or maybe continue to grow it. And one of the main ways to do this is to diversify your assets.

By ensuring your portfolio is well diversified across different asset classes, geographies, styles and size, you spread your risk exposure. If something goes wrong with one security, because it only accounts for a small proportion of your investments, it won’t be too detrimental to your overall wealth. Meanwhile other uncorrelated assets might be doing well, or at least not falling as badly. 

Funds are a good way to achieve a diversified portfolio because each one is a basket of securities and just one of these gives exposure to tens or hundreds of securities. 

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