As per the investment analysts, it is not good to invest only in one investment area or source as if the investment causes losses then all your money will be gone and also you will lose the savings as well as all your profits. So it is necessary that you diversify your investment strategy 2019 I the stock market as well as in any other investments.
So it is always a risk that you will lose your money, here Financeshed tells you about how you can lower the risk in the investments through the diversification of the investments especially for the new investors as it is not possible for them to reduce the risk as they do not have the proper market knowledge. Here are some of the ways to reduce the risk.
You should be prioritizing your financial need:
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You should be prioritizing your financial need so that you know where you can invest and where you cannot as it is necessary to know. You need to know how much you can earn and where you can invest, the returns which will be available in investing in share market shall be seen as you need to compare it with the average rate of return which you earn in the bank deposits so as you can see whether you are investing in the right way or not.
Reducing your risk in investment:
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It is necessary that you reduce the risk in your investment because it will bring how much you have earned from the investment as higher the risk the return rate will be more but also the investment may bring you the losses. So here is the way to reduce the risk.
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Though the actively managed indexed funds are expensive they are managed by the experts, who are highly qualified, and they will always have the watch over the market and they will try to bring the returns more than the average rate of return which is earned in the share market.
Keep Building Promising Portfolio:
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It is important to keep increasing our investment portfolio by investing steadily on a regular basis and building a strong portfolio. This practice will lower the investment risk as you invest the same amount over a period of time. You invest regularly in the specified securities and is able to judge the securities you want to buy as you can buy more when the value is low and less when the value is more.
Know when exactly to exit:
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You should always have an amount fixed on when you have to sell the security. Here the risk of losing will decrease if you have pre-decided the time of holding the security and exit price. This is very much important as you may become greedy and don’t sell the security and end up regretting when the things get worse.
In order to investment diversification you should also try multiple investment areas and have a proper bifurcation of the higher and lower risk bearing security. You also don’t have to always invest in securities as you can have a perfect blend of investment by creating portfolio, going for mutual fund investment, also taking chance in investing for some commercial or real estate. It purely depends on you decision of investing and risk taking capacity.